The Varlability of Board Size Determinants: An Empirical Analysis
Department or Administrative Unit
We use a sample of randomly selected CRSP-listed firms to explore the cross-sectional determinants of corporate board size. We find that the average number of directors on boards differs significantly across industries. Further evidence indicates that these differences are jointly and significantly determined by a variety of director, CEO, ownership, and firm-specific variables across industries. The determinants of board size also vary substantially across surviving and delistingfirms, regulated and unregulated companies, firms in financial distress, and bankrupt firms. Our models explain as much as 52% ofthe observed variation in board size. The cross-sectional variation in board size is driven by various economic forces. Therefore, understanding the choice of board structure requires a thorough examination ofthe associated costs and benefits for individual firms. [G30, G32, G33, G34]
Ning, Yixi, Wallace N. Davidson, III, and Ke Zhong. (Fall/Winter 2007). The Varlability of Board Size Determinants: An Empirical Analysis. Journal of Applied Finance, 46-61.
Journal of Applied Finance
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