The Prevalence and Causes of Multiple Directorships

Abstract: This thesis investigates the determinants of the number of directorships held by board directors, using a cross-sectional methodology with Swedish data from year 2007. Individual, board and company characteristics are used as explanatory variables to find out what affects the number of directorships held, and from these results we argue for three main causes of the existence of multiple directorships. The implication of the results is that multiple directorships is in some cases a conscious decision made by companies, with the purpose of strengthening the relationships within their contractual environment. However, it can also be seen as an outcome of market imperfections, caused by an excess demand for skilled directors. Further, we find that the incentives of the directors to hold multiple directorships is essential to the existence of multiple directorships. Finally, the low incidence of multiple directorships indicates that regulating against it would probably be ineffective.