Executive Summary
Multiple directorships are a common phenomenon observed across the globe. "Multiple directorships" refers to the practice of a member of the company`s Board of Directors serving on the boards of multiple companies. The terms "Multiple directorships" and "Director interlocking" are interchangeably used. Albeit the practice is lawful, these overlapping linkages give rise to ethical dilemmas. This has triggered us to study the impact of multiple directorships on profitability in the Kingdom of Saudi Arabia.
Our study reveals a high degree of inter-connectedness amongst the listed companies in the KSA. About 83% of listed companies in the KSA are interlinked through a shared board member. We infer from our study that multiple directorships significantly impact the net profits of financial institutions in the KSA while it has negligible impact on non-financial firms.
