Board Size and Firm Value: Evidence from Australia
Alex Tong () and
Ruoyun (Lucy) Zhao ()
No 182, Working Paper Series from Finance Discipline Group, UTS Business School, University of Technology, Sydney
We study the effect of board size on firm value in Australia. Using a large sample of Australian firms over the period 2001-2011, we find strong evidence of a negative relationship. We show that firms with a large board are associated with CEO compensation that is sensitive to firm size, but not to firm performance. This incentive to accumulate assets is congruent with the fact that firms with a large board also exhibit lower operating performance and higher operating costs. Furthermore, we find that the effect of board size is stronger in small firms. This result might explain why earlier studies, which focused on large Australian firms, found board size to have little impact on firm value.
Keywords: board of directors; corporate governance; firm performance; CEO compensation (search for similar items in EconPapers)
JEL-codes: G30 G31 G32 G34 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-eff, nep-hrm and nep-sbm
References: Add references at CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed
Published as: Nguyen, P., Rahman, N., Tong, A. and Zhao, R., 2015, "Board Size and Firm Value: Evidence from Australia", Journal of Management and Governance, forthcoming.
Downloads: (external link)
Journal Article: Board size and firm value: evidence from Australia (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:uts:wpaper:182
Access Statistics for this paper
More papers in Working Paper Series from Finance Discipline Group, UTS Business School, University of Technology, Sydney PO Box 123, Broadway, NSW 2007, Australia. Contact information at EDIRC.
Series data maintained by Duncan Ford ().