The Variability of Board Size Determinants: An Empirical Analysis
Document Type
Article
Department or Administrative Unit
Accounting
Publication Date
Fall 2007
Abstract
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 delisting firms, regulated and unregulated companies, firms in financial distress, and bankrupt firms. Our models explain as much as 52% of the 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 of the associated costs and benefits for individual firms.
Recommended Citation
Ning, Y.; Davidson III, W. N.; and Zhong, K. (2007). The Variability of Board Size Determinants: An Empirical Analysis. Journal of Applied Finance, 17(2), 46-61.
Journal
Journal of Applied Finance
Rights
Copyright © 2007
Comments
Please note: Due to copyright restrictions, this article is not available for free download through ScholarWorks @ CWU.