The impact of board size on firm performance: evidence from the UK

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dc.contributor.authorGuest, Paul M.
dc.date.accessioned2010-01-21T16:14:59Z
dc.date.available2010-01-21T16:14:59Z
dc.date.issued2009-06
dc.description.abstractWe examine the impact of board size on firm performance for a large sample of 2746 UK listed firms over 1981-2002. The UK provides an interesting institutional setting, because UK boards play a weak monitoring role and therefore any negative effect of large board size is likely to reflect the malfunction of the board's advisory rather than monitoring role. We find that board size has a strong negative impact on profitability, Tobin's Q and share returns. This result is robust across econometric models that control for different types of endogeneity. We find no evidence that firm characteristics that determine board size in the UK lead to a more positive board size-firm performance relation. In contrast, we find that the negative relation is strongest for large firms, which tend to have larger boards. Overall, our evidence supports the argument that problems of poor communication and decision-making undermine the effectiveness of large boards.en_UK
dc.identifier.citationPaul Guest, The impact of board size on firm performance: evidence from the UK, The European Journal of Finance, Volume 15, Issue 4, June 2009, pages 385-404en_UK
dc.identifier.issn1351-847X
dc.identifier.urihttp://hdl.handle.net/1826/4169
dc.identifier.urihttp://dx.doi.org/10.1080/13518470802466121
dc.language.isoenen_UK
dc.publisherTaylor & Francisen_UK
dc.rightsThis is a preprint of an article whose final and definitive form has been published in the The European Journal of Finance 2009[copyright Taylor & Francis]; The European Journal of Finance is available online at: http://www.informaworld.com/ http://dx.doi.org/10.1080/13518470802466121
dc.subjectCorporate governanceen_UK
dc.subjectBoard sizeen_UK
dc.subjectFirm performanceen_UK
dc.subjectEndogeneityen_UK
dc.subjectUKen_UK
dc.titleThe impact of board size on firm performance: evidence from the UKen_UK
dc.typeArticleen_UK

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