Abstract
Determining the optimum size of corporate boards is an important task for companies. Agency theory suggests that either too large or too small boards cause negative effects on firm operating performance. For a given sample of 113 listed firms in the German Prime market, we tested the effect of board size on return on assets and return on equity. Our findings provide evidence that there is a ...
Abstract
Determining the optimum size of corporate boards is an important task for companies. Agency theory suggests that either too large or too small boards cause negative effects on firm operating performance. For a given sample of 113 listed firms in the German Prime market, we tested the effect of board size on return on assets and return on equity. Our findings provide evidence that there is a significant negative Management Board size effect both on return on assets and return on equity. The results are consistent with the assumption of dysfunctional norms of behaviour within the German two-tier board structure.
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