Size Really Matters: Further Evidence on the Negative Relationship between Board Size and Firm Value

Publication Type

Journal Article

Publication Date

2005

Abstract

This study examines the impact of corporate governance mechanisms on the firm value of Singapore and Malaysia firms (as measured by Tobin's Q). We find little evidence of relationships between most corporate governance mechanisms and Tobin's Q. However, consistent with Yermack [Higher market valuation of firms with a small board of directors. J. Financ. Econ. 40 (1996), 185–211] and Eisenberg et al. [Larger board size and decreasing firm value in small firms. J. Financ. Econ. 48 (1998), 35–54], we find that there is an inverse relationship between board size and firm value in both countries. This suggests that the negative relationship between board size and firm value transcends different corporate governance systems.

Keywords

Corporate governance, Board size, Firm value, Singapore, Malaysia

Discipline

Accounting | Business Law, Public Responsibility, and Ethics | Corporate Finance

Research Areas

Corporate Governance, Auditing and Risk Management

Publication

Pacific-Basin Finance Journal

Volume

13

Issue

3

First Page

301

Last Page

318

ISSN

0927-538X

Identifier

10.1016/j.pacfin.2004.09.002

Publisher

Elsevier

Link to Full Text

Share

COinS