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ABSTRACTResearch Question/IssueThis paper primarily explores the relationship between busy boards and firm performance. Additionally, we have performed a quasi‐natural experiment to evaluate the impact of SEBI regulatory restrictions on multiple directorships on the firm performance.Research Findings/InsightsThe study sample includes all firms listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). Our primary findings indicate a nonlinear relationship between busy boards and firm performance. These results are more pronounced for the non‐business group firms and firms with high promoter ownership. Our quasi‐natural experiment results indicates that the treatment firms had a significant improvement in firm performance. The results of event study analysis and difference‐in‐difference analysis are robust for both short‐ and long‐term measures of firm performance. Furthermore, we observe an increase in the board meeting attendance of independent directors in the post‐mandate period.Theoretical/Academic ImplicationsTwo competing views prevalent in busy board literature are reputational effect hypothesis and distraction effect hypothesis. Our findings support the limit on number of outside directorships; if this number exceeds a certain threshold, the directors become less effective monitors and exacerbate the firm performance.Practitioner/Policy ImplicationsThe results are in favor of restriction on multiple directorship positions of independent directors by the regulators in emerging markets. Further, the study demonstrates that firms that adhere to good governance practices protect the investors' interests and improve the firm's performance.