The Impact of Outside Directors with Multiple Directorships on Credit Rating

[Purpose] This study empirically analyzes the effect of outside directors with multiple directorships on the credit ratings measured by a professional credit rating agency. It aims to show that the existence of multiple directorships constitutes valuable information in the evaluation of corporate governance. [Methodology] In order to attempt various analyses, balanced panel data were used, by drawing from nine years of data between 2011 and 2019. Correlation and Ordinary Least Square (OLS) analyses were performed on 4,712 samples. Ordered logit and probit analyses were conducted to reflect the characteristics of the variables. Panel analysis was also performed. [Findings] In the OLS and ordered logit and probit analyses, outside directors with multiple directorships had a significant negative relationship with credit rating. In contrast, inside directors did not have significant results. However, the panel analysis confirmed that both directors had a significant negative relationship with credit rating. [Implications] This study is meaningful in that it confirmed the negative relationship between multiple directorships and credit rating, and showed that this information is also reflected in the evaluation of professional credit rating agencies. Information on multiple directorships can have implications for corporate governance.