Ahmedabad: A study conducted by two IIMs says that a small group of "highly boarded directors" (directors who are on boards of five or more companies), control 66 percent of the total market capitalisation of NSE-listed companies, as of 2010.

This raises concerns about the efficacy of the recently introduced corporate governance norms, which are aimed at increasing the diversity in the director pool, it says.

The study – “Coping with Corporate Cholesterol, Board Interlocks and their Impact on Corporate Governance, The Indian Experience” -- was conducted by Director IIM Ahmedabad Dr Samir Barua, alongwith a visiting professor and two other assistant professors of IIM Bangalore.

Such concentration of economic power in the hands of a few is not desirable in the larger interests of the society, the researchers conclude.

"A small group of highly boarded directors seems to be in control of 66 per cent of the total market capitalisation of NSE-listed companies," said IIM-B Assistant Professor Suresh Bhagavatula, a co-author of the study.

For three years, from 2001 to 2003, the market capitalisation of highly boarded companies (HBCs - which have directors who are on multiple boards) ranged between 33 to 43 percent, it peaked at 70 percent in 2007, and was at 66 percent in 2010, according to the study.

When the listed companies were mandated by the government to have a higher percentage of non-aligned or independent directors on the boards, the expectation was that there would be a widening of pool of independent directors.

But, the researchers have found, the mandate has tended to increase multiple directorships and concentration of economic power, because in many cases, such additional independent director vacancies have been filled by incumbent directors from other companies.

The population of highly boarded directors has increased from 40 in 2001 to 71 in 2010.

The total number of directors of NSE-100 companies is 1,104, while 284 companies are HBCs.

The highly boarded directors constitute about 6 per cent of the overall director population of NSE-100 companies, the study says.

These trends suggest that despite the well-intentioned regulatory reforms, the extent of over-boarding among directors has not come down, there is actually a marginal increase, the researchers have concluded.