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- Publisher
- Springer Journals
- Copyright
- Copyright © 2009 by Springer Science+Business Media, LLC.
- Subject
- Business and Management; Management; Accounting/Auditing; Industrial Organization; Sociology, general
- ISSN
- 1385-3457
- eISSN
- 1572-963X
- DOI
- 10.1007/s10997-009-9091-z
- Publisher site
- See Article on Publisher Site
Abstract
Focusing on a sample of smaller firms with a history of poor operating performance, this paper posits that increases in board size will be associated with better share price performance. Notably, board sizes studied here are, on average, much smaller than those typically studied by prior research. Mostly consistent with predictions, board size is found to be positively correlated with firm value in between-firms tests, and changes in board size are found to be positively associated with annual stock returns. Last, event study results suggest that the market responds favorably to board size increases and unfavorably to large board size decreases. Together, these results identify a setting in which larger board sizes appear to be positively related to shareholder value.
Journal
Journal of Management & Governance – Springer Journals
Published: Mar 24, 2009