This paper studies the effect of independent directors' multiple directorships (MDs) on firm performance and examines the countervailing effects of “quality” and “busyness.” Using a unique panel data set covering all Hong Kong-listed non-financial firms, we find a strong and positive relation between MDs and firm value, supporting the quality hypothesis. We also give an insight into the effect of MDs in a contingency perspective and find that the positive effects of MDs on firm value are stronger under better corporate-governance standards, and INEDs with a CEO position underperform because of busyness. After the increase of the minimum independent directors of Hong Kong in 2004, the positive effect of MDs seems to be reduced, implying the policy may have increased the busyness of some INEDs. Investigating the mechanism behind the effect of MDs, we show that the firms with poor operating performance tend to appoint INEDs with higher MDs, and afterwards the change in operating performance measure and MDs are positively related, consistent with the resource dependency hypothesis and the quality hypothesis. The positive effect of MDs comes with a busyness tradeoff, however, since we find a U-shape relationship between MDs and earnings management (EM) through accruals and real activities, suggesting the busyness effect on earnings quality at high MD level. Besides, the market reaction to the appointment of INEDs also provide evidence to the “quality to busyness” non-linear effect of MDs. ii Our results are robust to a range of econometric specifications (fixed effect regression, pooled regression, 2SLS regression and event study), alternative MD measures, and firm-level and INED-level dataset. Our empirical evidence suggests that busy independent directors can improve firm performance and monitoring effectiveness before they become too busy, and overall supports increasing the minimum requirement for the fraction of independent directors.