Do Reputation Incentives Matter? Busy Directors and Corporate Social Responsibility in China

: This paper aims to examine the effect of busy directors on corporate social responsibility (CSR) based on their directorships’ reputation incentives. Using the panel data of Chinese-listed companies in the Shanghai and Shenzhen stock exchange between 2016 and 2021, ﬁxed-effects panel regression analysis is employed as the empirical methodology. In so doing, we ﬁnd that the effect of busy directors on CSR appears to be nonlinear. Then, by focusing on the relative size of the ﬁrms served by busy directors, our study further shows that busy directors can improve CSR in their relatively more prestigious directorships. Nevertheless, busy directors may induce negative CSR in their relatively less prestigious directorships. These results together identify reputation incentives as one factor in determining whether busy directors affect CSR. Therefore, we conclude that reputation is an effective mechanism that can motivate busy directors to monitor and advise CSR.


Introduction
In recent years, corporate social responsibility (CSR) has been paid increasing attention by researchers (Wang et [1][2][3][4][5].From the stakeholder theory perspective, CSR can be defined as a corporation's obligation to be accountable to all its stakeholders in all its operations and contends that busy directors may help attenuate agency costs and alleviate agency conflicts due to their ability, skill and experience, which stems from resource dependency theory.According to this theory, busy directors may provide their human capital and expertise.Explicitly, multiple board seats can signal directors' ability and quality (Fama and Jensen, 1983; Brickley et al., 1999;Mobbs, 2013; García-Sánchez and Martínez-Ferrero, 2018) [18][19][20][21].Shivdasani (1993) [22] demonstrates that directors with more directorships are more competent in the director labor market.James et al. (2018) [23] show that directors with multiple directorships significantly enhance firm performance and are related to more efficient asset utilization.Therefore, busy directors can perform their monitoring and advising duties more effectively, resulting in fewer value-reducing decisions.Furthermore, this hypothesis also proposes that busy directors can bring new valuable resources and information from other firms they serve.Holding multiple directorships can enable busy directors to establish social networks (Loderer and Peyer, 2002) [24].Busy directors may learn about other firms' different operational decisions or strategies.Field et al. (2013) [25] further document that busy directors may be more experienced and skilled than non-busy directors.As a result, busy directors are arguably high-quality directors with more experience.
By contrast, grounded in agent theory, the busyness hypothesis states that busy directors may be so busy that they do not function as active monitors and advisors, leading to more severe agency conflicts.Following this theory, as agents, busy directors should devote substantial energy and time to provide useful advising and monitoring.Nevertheless, busyness is typically proxied by the number of board seats (Hauser, 2018) [17].Hence, directors with multiple directorships have time and energy constraints to pay less attention than needed to execute their duties.Jiraporn et al. (2009) [26] show that busy directors are associated with poor board meeting attendance.Ahn et al. (2010) [27] find that directors with more board seats have less energy and time to devote than directors with fewer board seats.Masulis and Mobbs (2014) [28] further argue that holding multiple board seats can place a large restriction on busy directors' time and energy to reduce their effectiveness as advisors and monitors.These studies imply that multiple directorships can harm the quality of busy directors' advising and monitoring.In summary, according to agent theory, because serving on many boards may provide busy directors with numerous personal benefits, holding multiple directorships can be considered self-centered and opportunistic behavior, decreasing the ability of busy directors to fulfill their duties.Consistent with this view, Fich and Shivdasani (2006) [29], Latif et al. (2020) [30] and Chen and Guay (2020) [31] report that busy directors can lead to poor firm performance and weak corporate governance.Cashman et al. (2012) [32] and Daniliuc et al. (2021) [33] conclude that directors holding multiple directorships are ineffective and detract from firm value.Hauser (2018) [17] suggests that busy board structures are inefficient.
It is evident that the debate over the effect of busy directors in corporate governance continues and needs further investigation.Specifically, it is essential to examine the relation between busy directors and major corporate decisions, such as CSR.Therefore, in this study, we link busy directors to CSR.
Indeed, identifying the effect of busy directors on CSR is an empirical challenge.According to the discussion above, on the one hand, because busy directors may be more experienced and talented, they should fulfill their duties more effectively in safeguarding the interests of stakeholders.On the other hand, busy directors have energy and time constraints that may reduce their effectiveness in advising and monitoring CSR.This inconclusive evidence may be due to the underlying premise that the impact of busy directors on CSR is conditional and depends on their efforts distribution.Accordingly, we investigate whether the effect of busy directors on CSR is beneficial or detrimental by illustrating how they allocate their limited time and energy across their directorships.Fahlenbrach et al. (2010) [34] demonstrate that busy directors view their directorships as varying in attractiveness and emphasize that reputation considerations can significantly impact the supply of busy directors' monitoring and advising services.Reputation is a valuable asset for busy directors, which sends positive signals to the market about their talent (Adams and Ferreira, 2008) [35] and expands the likelihood of obtaining additional directorships (Yermack, 1996) [36].Consequently, reputation can be a powerful incentive for busy directors.Furtherly, Fama and Jensen (1983) [18] argue that busy directors may make substantial investments in preserving and enhancing their reputations as effective monitors and advisors.Masulis and Mobbs (2014) [28] and Sila et al. (2017) [37] document that reputation incentives can directly affect busy directors' attention in board committees and their board meeting attendance.These studies reveal that busy directors tend to distribute their efforts unequally across all their directorships, considering a directorship's relative contribution to their reputations.Busy directors tend to prioritize their efforts in their more prestigious directorships at the expense of their other directorships.Therefore, this study mainly explores whether and how busy directors affect CSR based on their directorships' relative reputation incentives.More broadly, we focus on busy directors with strong and weak reputation incentives, because they can explain CSR variation.
In this study, we examine the relation between busy directors and CSR.Our further analysis explores the net effect of busy directors on CSR by considering the different reputation incentives busy directors face across their directorships.Our study reveals the following results by employing the fixed-effects panel regression analysis.We show that the effect of busy directors on CSR appears to be nonlinear.Then, by focusing on the relative size of the firms served by busy directors, our finding indicates that busy directors can improve CSR in their relatively more prestigious directorships.Nevertheless, busy directors may induce negative CSR in their relatively less prestigious directorships.These results together identify reputation incentives as one factor for whether busy directors affect CSR.Finally, given the consistent results of the robustness checks, our results are robust and unlikely confounded by endogeneity.
Our paper makes several important contributions to the literature.Firstly, this study is the first to identify whether busy directors as the determinant of CSR implementation.To our knowledge, no existing literature directly examines whether and how busy directors affect CSR.Therefore, the effect of busy directors on CSR remains unclear.Nevertheless, given that reputation concerns create strong incentives for busy directors to demonstrate their capability and maintain their directorships, we identify busy directors with strong and weak reputation incentives and further study whether the effect of busy directors with strong versus weak reputation incentives on CSR may differ.This paper shows that busy directors with strong reputation incentives can improve CSR.Conversely, busy directors with weak reputation incentives can harm CSR.These results shed new light on whether busy directors affect CSR and contribute to the literature on CSR.
Secondly, we provide new evidence on the effect of busy director reputation incentives.Existing studies assume that busy directors distribute their efforts equally across all firms they serve.Nevertheless, reputation is a significant issue for busy directors.Masulis and Mobbs (2014) [28] suggest that busy directors distribute their talent unequally based on their directorships' relative prestige.Their finding reveals that busy directors place greater priority and act more vigorously in their relatively more prestigious directorships.Expanding on these results, we show that reputation can motivate busy directors to monitor and advise CSR more effectively.Furthermore, given that busy directors represent both the benefits obtained from their talent and the costs associated with their busyness, we further emphasize the net effect of busy directors and find that this net effect on CSR may vary over reputation incentives.In their relatively more prestigious directorships, the beneficial effect of busy directors on CSR may dominate the adverse effect.However, in their relatively less prestigious directorships, the net effect of busy directors on CSR is negative.These results of our study deepen the understanding of reputation as a strong motivating force in enhancing a busy director's monitoring and advising CSR and contribute to the literature on busy directors.
Finally, this study uses data from China, where no literature studies the relation between busy directors and CSR based on reputation incentives.The Chinese market possesses characteristics similar to many emerging markets, such as weak corporate gov-ernance practices, concentrated ownership and weak legal protection.Hence, our results should be illuminating for emerging countries.
China provides a perfect research setting.Firstly, Chinese listed firms are characterized by having a concentrated ownership structure, and they are plagued by agency problems between controlling shareholders and other stakeholders (Jiang et al., 2010) [38].Therefore, concentrated ownership enables the controlling shareholders to pursue their private benefits at the expense of other stakeholders by tunneling resources from their firms.Over recent decades, tunneling has been substantially impairing other stakeholders' interests (Wang et al., 2015) [1].Therefore, it leaves greater room for improvements in CSR.Secondly, the Chinese market faces significant supply constraints of good-quality directors.In recent years, China has imposed loose limits on the number of directorships to cope with the director supply problem (Liu et al., 2016) [13].Thereby, in China, busy directors are in high demand and are pursued by many firms for their ability and experience.Currently, most directors are busy directors in China's listed firms (Jia and Tang, 2018) [39].In 2015, nearly three-fourths of Chinese firms had appointed busy directors (Firth et al., 2016) [40].This relatively high percentage provides us with a unique dataset to discuss the issue of busy directors.Meanwhile, in China's institutional context, firms have the high expectation that busy directors should make decisions on behalf of stakeholders and ensure enterprise behaviors are in line with ethical practices since busy directors are predictably more qualified and talented than non-busy directors.This context provides a better chance for busy directors to fully play their monitoring and advising role in CSR.Thirdly, in China, the role of busy directors' monitoring and advising has relied mainly on reputation incentives because the tournament compensation mechanism is under-developed (Khan et al., 2022) [41] and the legal system is weak (Liu et al., 2016) [13].Reputation is a vital criterion for assessing and selecting directors in China, representing a valuable asset for directors.Hence, in China, busy directors tend to perform their duties more effectively to establish their reputations as decision experts.In summary, in China, busy directors have incentives to maintain and enhance their reputations.We argue that reputation is a powerful incentive for busy directors in China and study the effect of busy directors with relatively strong and weak reputation incentives on CSR.
The remainder of our paper is organized as follows.In Section 2, we review prior literature and develop our hypotheses.Section 3 describes our sample and research design.Section 4 discusses the empirical results.Section 5 concludes this paper.

Literature Review and Hypothesis Development
The responsibility of directors is to align corporate behavior with pressure from all stakeholders (Jo and Harjoto, 2011) [42].Busy directors are often appointed to monitor and advise CSR for their expertise and ability (Masulis et al., 2012) [43] or because of valuable connections, resources and information through their multiple directorships (Akbas et al., 2016) [44], especially in emerging countries (Latif et al., 2020) [30].However, given that busy directors have limited energy and time, busyness may adversely affect their monitoring and advising CSR.Thus, busy directors may provide both positive and negative effects on CSR.
Following the premise that the effect of busy directors on CSR is conditional and depends on their distribution of efforts, we further discuss how busy directors allocate their limited time and energy across their boards.Masulis and Mobbs (2014) [28] demonstrate that busy directors do not give equal priority to all their boards.Meanwhile, a good reputation increases busy directors' human capital and brings their opportunities for additional appointments (Loderer and Peyer, 2002) [24].Therefore, reputation is a powerful and effective incentive for busy directors.Fama and Jensen (1983) [18] report that preserving and enhancing reputation in the labor market for directorships is a primary motivation of busy directors.Knyazeva et al. (2013) [45] suggest that reputation considerations can greatly affect the supply of busy directors' advising and monitoring services.Sila et al. (2017) [37] further emphasize the importance of strong reputation incentives for busy directors' performance.These studies indicate that busy directors have incentives to maintain and enhance their reputation as diligent monitors and advisors.In so doing, Fahlenbrach et al. (2010) [34] argue that busy directors concentrate their efforts on these boards, where their reputation benefits are maximized.Masulis and Mobbs (2014) [28] find that busy directors shift more of their time and energy toward their more prestigious directorships and away from their less prestigious directorships.Lin et al. (2016) [46] document that busy directors work more vigorously in their relatively more prestigious directorships.Hence, reputation incentives can offer one explanation for why some busy directors are more effective in the role of their monitoring and advising CSR.In summary, busy directors distribute their efforts unequally based on their directorships' relative reputation incentives, meaning that the effect of a busy director on CSR differs in his or her more and less prestigious directorships.
All directorships are not equal in terms of reputation incentives they offer (Masulis and Mobbs, 2014) [28].Firm size is a natural source of busy director reputation incentives (Adams and Ferreira, 2008) [35].Prior studies use firm size as a proxy for reputation incentives and provide evidence that reputation incentives are related to firm size (Sila et al., 2017) [37].Therefore, we argue that directorships in firms of differing sizes can create different reputation incentives for busy directors to monitor and advise CSR.Ahn et al. (2010) [27] report that large firms can offer busy directors with greater visibility, prestige and compensation.In summary, busy directors' reputations increase with firm size.Busy directors have stronger reputation incentives to monitor and advise CSR in their relatively larger firms, leading to these firms capturing more of a busy director's time and energy.Thus, in these relatively larger firms, the talent effect of busy directors on CSR may dominate the busyness effect.By contrast, busy directors have weaker reputation incentives to perform well in their relatively smaller firms, so they do not function as effective monitors and advisors.Then, in China, the controlling shareholders are better able to pursue their private benefits at the expense of other stakeholders, leading to more severe agency conflicts between controlling shareholders and other stakeholders.Therefore, in these relatively smaller firms, the net effect of busy directors on CSR is negative.In other words, busy directors with strong reputation incentives can improve CSR.Conversely, busy directors with weak reputation incentives can harm CSR.
Based on these, we argue that the net effect of busy directors on CSR varies with reputation incentives.Our hypotheses are proposed as follows.
Hypothesis 1. Busy directors can improve CSR in the boards of their relatively more prestigious firms.
Hypothesis 2. Busy directors may induce negative CSR in the boards of their relatively less prestigious firms.

Sample
The data of this study are from two following sources.CSR data are from the CSR rating report provided by Rankins CSR Ratings (RKS).Meanwhile, we obtain director data and all other data from the China Stock Market and Accounting Research (CSMAR) database.Hence, our sample consists of firms listed in the Shanghai and Shenzhen stock exchanges during 2016-2021.This paper excludes financial companies because they have substantially different governance and performance systems compared with non-financial companies in China.Finally, after excluding observations with omitted variables, a final sample with 3414 firm-year observations is obtained.

Dependent Variable
Our dependent variable is CSR.More specifically, CSR is measured by using the rating data of CSR provided by Rankins CSR Ratings (RKS), a leading independent CSR-rating entity in China.RKS provides a scoring system for the different aspects of CSR from the stakeholder's perspective.RKS data and their validity are documented in previous Chinese CSR studies (Marquis and Qian, 2014) [47].

Independent Variables
To test the effect of busy directors, we create an independent variable about busy directors (BD), which is measured by the percentage of busy directors on the board of a firm.Based on Ferris et al. (2003) [48], we consider a director as busy if they hold two or more directorships.
However, busy directors can produce both the benefits obtained from their talent and the costs associated with their busyness.Additionally, as discussed earlier, the net effect of busy directors may vary with their reputation incentives.Thus, to further capture the net effect of busy directors, we use other independent variables about busy directors, considering the factor of reputation incentives.Firm size is a natural source of busy director reputation incentives (Ryan and Wiggins, 2004) [49].Large firms can offer more opportunities to enhance busy directors' reputations.Masulis and Mobbs (2014) [28] argue that busy director reputation incentives can be measured based on the size of a firm relative to other firms that a busy director also serves.Consequently, we argue that busy directors may have high reputation incentives in their relatively larger firms and have low reputation incentives in their relatively smaller firms.For each busy director, we rank all directorships where the busy director serves by comparing the relative size of the equity market capitalization in each firm.Therefore, higher-ranked firms are more prestigious for a busy director, and lower-ranked firms are less prestigious.Given this ranking, we further examine the time and energy a busy director spends across their directorships.Busy directors expend more time and energy in their higher-ranked directorships and are less willing to put forth time and energy in their lower-ranked directorships.
Based on these above, we create a variable about busy directors with strong reputation incentives (BDSRI), which is measured by the proportion of busy directors in a firm's board for whom this firm is their highest-ranked.This measure captures the diligence and talent of busy directors, and, to some extent, this measure may avoid the busyness impact of busy directors.Then, we also create a variable about busy directors with weak reputation incentives (BDWRI), which is measured by the percentage of busy directors in a firm's board for whom this firm is their lowest ranked.This measure captures the inefficiency of busy directors and can be a noisy measure of monitoring and advising intensities.These two variables mean that different busy directors on the same board may experience various reputation incentives.Moreover, they capture the relative importance of the firm's directorship to a busy director and offer an easy measure to calculate how busy directors allocate their efforts across their directorships.In summary, in this study, we further utilize these two measures to determine whether the net effect of busy directors on CSR differs in their relatively more and less prestigious directorships.

Control Variables
Prior studies argue that firm characteristics and board characteristics have an impact on CSR.Following these studies, we include the control variables related to firm characteristics and board characteristics.Variables about firm characteristics include corporate performance (ROA), leverage ratio (LEV), managerial ownership (ESHR) and ownership structure (FSHR).Variables about board characteristics include board size (Board), directors' compensation (Pay) and CEO duality (DUAL).
All variable definitions are shown in Table 1.

Models
This study uses the panel data of Chinese-listed companies between 2016 and 2021, which have two dimensions of firm and year.However, our panel data may lead to unobserved effects of firm and year, which can significantly bias estimation.Fich and Shivdasani (2006) [29] suggest that the fixed-effects model is more reliable than the Ordinary Least Square (OLS) regression in avoiding the unobserved heterogeneity problem.Therefore, we perform the panel regression analysis with firm and year fixed effects by employing STATA software.In addition, according to Petersen (2009) [50], when analyzing the panel data, there are cross-sectional correlation and time serial autocorrelation.Therefore, standard errors are clustered at the firm and year levels to correct these potential problems.

BD
The percentage of busy directors in a firm.

BDSRI
The percentage of busy directors in a firm for whom this firm is their largest firm measured by the logarithm of the firm's total assets.

BDWRI
The percentage of busy directors in a firm for whom this firm is their smallest firm measured by the logarithm of the firm's total assets.

ROA
Operating profits divided by total assets.

LEV
Total liabilities divided by total assets.

ESHR
The percentage of shares held by the executives in the board.

FSHR
The shareholding ratio of the largest shareholder.

Board
The total number of directors on the board.

Pay
The logarithm of a firm's directors' compensation.

DUAL
If the chairman of the board and the CEO are the same person, DUAL equals 1, and 0 otherwise.
In this study, we first employ the following model to examine the effect of busy directors on CSR directly.
Then, we use the following model to explore the net effect of busy directors on CSR.
Finally, we estimate the following model to study the varying net effect of busy directors on CSR based on their directorships' reputation incentives.
In these three models, i represents the firm, t represents the year and ε is the normally distributed error term.Meanwhile, to reduce the influence of outliers, all variables are winsorized at 1% and 99%.

Descriptive Statistics
Table 2 displays the descriptive statistics of our sample.Firstly, the mean (median) of CSR is 32.783 (29.371), the minimum is 15.928, the maximum is 77.585, and the standard deviation is 10.437.These figures demonstrate a large discrepancy in the degree of CSR performance among different firms.Most of the Chinese listed firms perform worse in CSR.Secondly, we calculate the percentage of busy directors and find that, on average, 36.25% of directors in a board are considered as busy.We further determine the percentage of firms whose board has busy directors and also find that 83.79% of firms in our sample include busy directors.Finally, we concentrate on busy directors with strong reputation incentives because they have been argued to offer more effective monitoring and advising.The mean percentage of busy directors in a board for whom this directorship is the highest ranked is 0.104.Conversely, busy directors with weak reputation incentives can be considered inefficient monitors and advisors.We find that the mean percentage of busy directors in a board for whom this directorship is the lowest ranked is 0.079.Table 3 presents the correlations between variables.The positive correlations between BD and CSR are insignificant in both Pearson and Spearman analyses.At the same time, BDSRI is positively and significantly related to CSR at the 1% level.We also find that the correlation coefficients between BDWRI and CSR are negative and significant at the 1% level.Finally, the correlation coefficients between all two variables are relatively low, indicating that there is no severity of the multicollinearity problem in our study.As a result, we further perform the regression analysis in the next section.

Regression Results
We first report the regression results on a linear relation between busy directors and CSR in Table 4. Column (1) presents the results of the univariate test.The regression coefficient of BD is positive and insignificant (t-value = 1.382).However, the univariate analysis does not consider the correlations between busy directors and other potential determinants of CSR.Therefore, in the regression analysis, we control for two groups of variables: firm characteristics and board characteristics.In Column (2), we include some control variables related to firm characteristics, such as ROA, LEV, ESHR and FSHR.The regression coefficient of BD remains insignificant and positive (t-value = 1.053).In Column (3), we further include a series of control variables related to board characteristics and find that the regression coefficient of BD is 0.454, still insignificant (t-value = 0.921).These empirical results above indicate that the inference about the positive and linear relation between busy directors and CSR is incomplete.This implies that the impact of busy directors is negative, positive or irrelevant on CSR.Therefore, we conclude that the positive effect and the negative effect of busy directors on CSR may be mixed and further model a nonlinear relation between busy directors and CSR.Then, in Table 5, this paper presents the regression results on a nonlinear relation between busy directors and CSR.In Columns (1), ( 2) and (3), we find that the nonlinear relation between busy directors and CSR: the regression coefficients of BD are significantly negative at the 1% level, and the regression coefficients of BD squared are significantly positive at the 1% level.This result shows that busy directors are not equally beneficial for CSR of all firms they serve, supporting the view that the beneficial impact of busy directors on CSR should be weighed against the adverse effect.Thus, we emphasize and identify the net effect of busy directors on CSR.
We continue to find that, in firms with fewer busy directors, the busyness effect of busy directors on CSR outweighs the talent effect.Nevertheless, when the percentage of busy directors exceeds a certain threshold, the net effect of busy directors on CSR is positive.Specifically, Fama and Jensen (1983) [18] find that busy directors are attracted to serve good reputable firms to increase their reputational assets and benefits.Ahn et al. (2010) [27] show that reputable firms pursue busy directors for their high qualifications.Meanwhile, Knyazeva et al. (2013) [45] suggest that more reputable firms tend to draw busy directors.These arguments indicate that the number of busy directors represents firm prestige or reputation.Therefore, this nonlinear relation suggests that the net effect of these two contradicting forces may vary over reputation incentives firms offer.
To illustrate the role of reputation incentives more clearly, we further study the relation between busy directors and CSR based on all their directorships' relative reputation incentives.Table 6 presents the regression results to compare the effect of busy directors with strong versus weak reputation incentives on CSR.In Columns (1), ( 2) and ( 3), the regression coefficients of BDSRI are significantly positive at the 1% level, supporting Hypothesis 1.This result reveals that busy directors with strong reputation incentives can improve CSR.We have further evidence that busy directors prioritize and concentrate their efforts in their relatively more prestigious directorships, where their talent benefits are greater at the expense of their remaining boards.Thus, in these directorships, the positive effect of busy directors on CSR may dominate the negative effect.Conversely, in Columns ( 1), ( 2) and ( 3), we find that the regression coefficients of BDWRI are significantly negative at the 1% level.These results are consistent with Hypothesis 2 and show that busy directors with weak reputation incentives may induce negative CSR.Furthermore, we find that busy directors may pay less attention to their less prestigious directorships, reducing the merits of busy directors as more skilled and qualified directors.Therefore, in these directorships, the costs associated with busy directors' busyness outweigh the benefits obtained from busy directors' talent, implying that the net effect of busy directors on CSR is negative.Our findings further indicate that the net impact of busy directors on CSR differs at low and high levels of reputation incentives.Based on these results above, we conclude that busy directors distribute their efforts unequally based on their directorships' relative prestige, which can further explain why there is a nonlinear relation between busy directors and CSR.In summary, reputation incentives can be an essential factor in identifying whether busy directors affect CSR.

Robustness Checks
In this section, to verify the reliability of our results, we discuss the results of the following robustness checks.Firstly, to avoid the possible effect of the endogeneity problem between busy directors and CSR, independent variables are all lagged one year.These regression results are presented in Table 7.In Columns (1)-( 3), the regression coefficients of BD t−1 are positive and insignificant, still implying that the positive effect and the negative effect of busy directors on CSR may be mixed.In Columns ( 4)-( 6), the regression coefficients of BD t−1 are significantly negative at the 1% level and the regression coefficients of BD t−1 squared are significantly positive at the 1% level, still showing that the percentage of busy directors has a nonlinear relation with CSR.In Columns ( 7)-( 9), the regression coefficients of BDSRI t−1 are significantly positive at the 1% level, still consistent with Hypothesis 1.Meanwhile, the regression coefficients of BDWRI t−1 are significantly negative at the 1% level, still supporting Hypothesis 2. These results above do not alter our previous conclusions.1.
Secondly, we construct three dummy variables to check the robustness of our primary findings.The first dummy variable is DBD, which equals 1 if a firm has busy directors and 0 otherwise.The second dummy variable is DBDSRI, which equals 1 if a firm has busy directors with strong reputation incentives and 0 otherwise.DBDWRI is the third dummy variable, indicating whether a firm has busy directors with weak reputation incentives.We use these three dummy variables as independent variables to re-examine the regressions.Regression results are presented in Table 8.In Columns (1)-(3), the regression coefficients of DBD are insignificant and positive.These results are consistent with our finding that the positive effect of busy directors is entangled with the negative effect, indicating a possible nonlinear relation between busy directors and CSR.In Columns (4)-( 6), the regression coefficients of DBDSRI are significantly positive at the 1% level, still revealing that busy directors with relatively strong reputation incentives are positively related to CSR.At the same time, the regression coefficients of DBDWRI are significantly negative at the 1% level, still showing that firms having busy directors with relatively weak reputation incentives are associated with worse CSR.Therefore, these findings keep our conclusions unchanged and are consistent with our hypotheses.Thirdly, as there might be differences in reputation incentives between state-owned enterprises (SOEs) and non-state-owned enterprises (non-SOEs) in China, by focusing on property ownership, we re-examine whether busy directors affect CSR based on reputation incentives.Firth et al. (2016) [40] find that SOEs can send the positive signal in the market, legitimize the firm business and gain resources from the stakeholders.In the unique context of China, compared with non-SOEs, SOEs can offer more opportunities for reputation building and higher visibility, leading busy directors to allocate more effort to SOEs.It is clear that reputation incentives in SOEs and non-SOEs produce different effects for busy directors.Hence, given reputation incentives, we predict that busy directors can enhance CSR in SOEs.Conversely, busy directors may harm CSR in non-SOEs.We construct an independent variable (BDS), which is measured by the percentage of busy directors holding multiple directorships of SOEs and non-SOEs at the same time in a firm.The full sample is divided into SOE and non-SOE sub-samples to re-examine the regressions.Regression results are presented in Table 9.In Columns (1)-(3), the regression coefficients of BDS are significant and positive at the 1% level, still revealing that busy directors with strong reputation incentives can enhance CSR.In Columns ( 4)-( 6), the regression coefficients of BDS are significantly negative at the 1% level, still showing that busy directors with weak reputation incentives may induce negative CSR.These findings keep our conclusions unchanged.1.
Finally, we attempt to address the problem of endogeneity by using lagged independent variables, but there may still be the reverse-causality problem.To alleviate this problem, we perform a two-stage least squares regression (2SLS) using the average number of BDSRI in the same year and industry (IBDSRI) and the average number of BDWRI in the same year and industry (IBDWRI) as instrument variables.2SLS results are presented in Table 10.In Column (3), the regression coefficient of BDSRI is still significant and positive at the 1% level.Meanwhile, the regression coefficient of BDWRI is still significant and negative at the 1% level.These results are consistent with our previous findings.

Conclusions
Our paper aims to investigate whether and how busy directors affect CSR based on their directorships' reputation incentives.Regarding CSR determinants, the board of directors has a fundamental and vital role in CSR strategic decision-making and practices.At present, one notable characteristic of board structure is the service of busy directors.Nevertheless, few studies explore the effect of busy directors on CSR.This issue is the focus of our study.On the one hand, busy directors are often appointed to monitor and advise CSR for their experience and talent.On the other hand, busy directors have energy and time constraints that may adversely affect their ability to monitor and advise CSR.Consequently, the effect of busy directors on CSR is still inconclusive.However, given that busy directors have heavy demands on their time and energy, the effect of busy directors on CSR may heavily depend on their distribution of efforts.Meanwhile, reputation is a strong motivating force in enhancing busy directors' monitoring and advising incentives, determining their efforts distribution.Therefore, understanding whether reputation creates strong incentives for busy directors to advise and monitor CSR effectively is important.
Using the panel data of Chinese-listed companies in the Shanghai and Shenzhen stock exchange from 2016 to 2021, the fixed-effects panel regression analysis is employed as the empirical methodology.In so doing, we find that the effect of busy directors is nonlinear on CSR.Then, by focusing on the relative size of the firms served by busy directors, we further show that busy directors can improve CSR in their relatively more prestigious directorships.Nevertheless, busy directors may induce negative CSR in their relatively less prestigious directorships.These results together identify reputation incentives as one factor for whether busy directors affect CSR.Therefore, we conclude that reputation is an effective mechanism that can motivate busy directors to monitor and advise CSR.
This study has some important theoretical implications.First, whether busy directors can improve CSR is conditional.Our findings show that it is necessary to consider the importance of reputation incentives when discussing whether and how busy directors affect CSR.Therefore, we identify busy directors with strong and weak reputation incentives.Our study finds that busy directors with strong reputation incentives can improve CSR, and busy directors with weak reputation incentives can harm CSR.These results shed new light on whether busy directors can improve CSR and contribute to the literature on CSR.Second, this study helps to understand the nature of reputation incentives and contributes to the literature on busy directors.Our results show that busy directors provide both the talent and the busyness effects on CSR.Thus, we further focus on the net effect of busy directors on CSR by exploring how reputation incentives affect busy directors' distribution of efforts.This study indicates that reputation incentives can capture the varying net effects of busy directors on CSR by illustrating that busy directors allocate their time and energy unequally across their directorships.Together, we conclude that reputation incentives can strongly influence busy directors' actions and offer a different perspective on the effect of busy directors.Third, our empirical analysis is the first to use China's data.These results should be illuminating for emerging markets.
This study also provides some practical implications that may be useful to firms in their attempts to increase the beneficial effect of busy directors on CSR.We recognize that firms actively implement CSR by recruiting busy directors with strong reputation incentives.These busy directors tend to concentrate their time and energy in directorships, where they can gain the most reputation benefits.Thus, when busy directors have strong incentives to maintain and enhance their reputation, the benefits of busy directors outweigh the costs.Likewise, the CSR of firms with more busy directors who consider this their most prestigious directorship may benefit more from these talented directors' greater efforts.In summary, firms can better prompt busy directors to fulfill their CSR duties by establishing an effective reputation mechanism.In fact, our results provide support for the importance of reputation incentives and help busy directors promote CSR implementation in China.
This paper proposes that reputation incentives can be critical to the impact of busy directors on CSR.However, our study has some limitations.On the one hand, this study focuses only on the Chinese market, limiting the generalizability of our results.Therefore, future research should obtain data from other countries and offer further empirical evidence of our findings' robustness.On the other hand, our results focus on the importance of reputation incentives.Other critical potential factors, such as busy directors' age and social connections, could affect busy directors' abilities to provide reliable monitoring and advising CSR.These other factors can be examined more carefully in the future to understand the relation between busy directors and CSR.

Table 1 .
Variable definitions.CSR performance, provided by the Rating score of CSR from RKS.

Table 4 .
Linear relation between busy directors and CSR.

Table 5 .
Nonlinear relation between busy directors and CSR.

Table 6 .
The effect of busy directors with strong and weak reputation incentives on CSR.
Note: ***, ** and * indicate significance at the 1%, 5% and 10 % levels, respectively.t-values are reported in parentheses.All variables are defined in Table

Table 7 .
Robustness check (independent variables lagged one year).