Outside directors, firm life cycle, corporate financial decisions and firm performance

Abstract We investigate whether directors with multiple outside board directorships are related to corporate financial strategy across firm life cycle stages. Using a large sample of firms from the Gulf Cooperation Council (GCC) countries, we find that when the number of directors with multiple board seats increases, firms' level of cash holdings rises, capital expenditure declines, selling, general and administrative (SG&A) expenses increase, and firm performance decreases. We further demonstrate how the relationship varies across different stages of their life cycle. Our findings have significant implications for policy makers, regulators and stockholders in GCC countries and in other emerging markets.