Determinants of the Size and Structure of Corporate Boards: 1935-2000

Kenneth Lehn, Sukesh Patro and Mengxin Zhao

No 2008-13, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: We argue that the size and composition of corporate boards are determined by tradeoffs involving the information that directors bring to boards versus the coordination costs and free rider problems associated with their additions to boards. Our hypotheses lead to predictions that firm size and growth opportunities are important determinants of these board characteristics. Using a sample of 82 U.S. firms that survived over the period of 1935 through 2000, we find strong support for the hypotheses. The hypotheses also find support in the relation between changes in board size and firms' merger and divestiture activity, and changes in the geographical diversification of firms. We find no robust relation between firm performance and either board size or composition after accounting for the determinants of these board characteristics.

Keywords: Board size; board composition; mergers and acquisitions; firm size; growth opportunities; diversification; geographical diversification; firm performance; endogeneity (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2008-04
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-cse and nep-his
Note: December, 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitcei:2008-13

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