Busy Outside Directors and Stock Price Crash Risk

This study investigates how multiple directorships, often referred to as ‘busy’ boards, influence firms’ information environment and stock price crash risk. We find that multiple directorships are positively associated with crash risk, and this effect is primarily driven by busy outside directors rather than busy inside directors. Further analysis shows that the negative monitoring effects of busy outside directors are mitigated when local communities and corporate governance practices emphasise a long-term perspective. We also document that firms with busy outside directors disclose their environmental practices less frequently and in less detail, which further increases crash risk.