Size of the Board

Now here’s an inconvenient truth: small boards are better

While it’s one of the most vexing and hotly debated topics in governance circles, a growing mountain of research suggests we’re dealing with what Al Gore might well term another “inconvenient truth”.

I’m referring to the size of a board, what effect it has on the performance of the entity and whether there’s such a thing as an optimal number of directors.

In recent years, research across the globe has tended to find that small is good. There’s the 2016 study by Pascal Nguyen et al entitled ‘Board size and firm value: evidence from Australia’ that, using a large sample of Australian firms over the period 2001 to 2011, found strong evidence of a negative relationship between board size and firm value.
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