Does Board Size Really Matter? Evidence from Australia

This study examines the impact of board size of Australian firms on Tobin’s Q. Agency theory suggests that there is an inverse relationship between board size and Tobin’s Q (Yermack 1996; Eisenberg et al. 1998). The resource dependence argument, however, hypothesizes that larger boards can lead to h...

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Main Author: Lukas Y. Setia-Atmaja
Format: Article
Language:English
Published: Universitas Gadjah Mada 2008-09-01
Series:Gadjah Mada International Journal of Business
Online Access:https://jurnal.ugm.ac.id/gamaijb/article/view/5559
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spelling doaj-d89ebb426e0442e4b92d9691d2a560172020-11-25T02:38:59ZengUniversitas Gadjah MadaGadjah Mada International Journal of Business1411-11282338-72382008-09-0110333135210.22146/gamaijb.55594885Does Board Size Really Matter? Evidence from AustraliaLukas Y. Setia-Atmaja0Prasetiya Mulya Business School, JakartaThis study examines the impact of board size of Australian firms on Tobin’s Q. Agency theory suggests that there is an inverse relationship between board size and Tobin’s Q (Yermack 1996; Eisenberg et al. 1998). The resource dependence argument, however, hypothesizes that larger boards can lead to higher performance as the CEO’s need for advice is a function of the complexity of the organization (Pfeffer 1972; Klein 1998). Analyzing a panel data of 1,530 firm-year observations using random effects technique, this study finds a positive relationship between board size and Tobin’s Q. The random effects regression results also reveal that the positive relationship between board size and Tobin’s Q is driven by firm size as this positive relationship is only found in larger firm sample but not in the smaller firm sample. The overall results support the resource dependence argument.https://jurnal.ugm.ac.id/gamaijb/article/view/5559
collection DOAJ
language English
format Article
sources DOAJ
author Lukas Y. Setia-Atmaja
spellingShingle Lukas Y. Setia-Atmaja
Does Board Size Really Matter? Evidence from Australia
Gadjah Mada International Journal of Business
author_facet Lukas Y. Setia-Atmaja
author_sort Lukas Y. Setia-Atmaja
title Does Board Size Really Matter? Evidence from Australia
title_short Does Board Size Really Matter? Evidence from Australia
title_full Does Board Size Really Matter? Evidence from Australia
title_fullStr Does Board Size Really Matter? Evidence from Australia
title_full_unstemmed Does Board Size Really Matter? Evidence from Australia
title_sort does board size really matter? evidence from australia
publisher Universitas Gadjah Mada
series Gadjah Mada International Journal of Business
issn 1411-1128
2338-7238
publishDate 2008-09-01
description This study examines the impact of board size of Australian firms on Tobin’s Q. Agency theory suggests that there is an inverse relationship between board size and Tobin’s Q (Yermack 1996; Eisenberg et al. 1998). The resource dependence argument, however, hypothesizes that larger boards can lead to higher performance as the CEO’s need for advice is a function of the complexity of the organization (Pfeffer 1972; Klein 1998). Analyzing a panel data of 1,530 firm-year observations using random effects technique, this study finds a positive relationship between board size and Tobin’s Q. The random effects regression results also reveal that the positive relationship between board size and Tobin’s Q is driven by firm size as this positive relationship is only found in larger firm sample but not in the smaller firm sample. The overall results support the resource dependence argument.
url https://jurnal.ugm.ac.id/gamaijb/article/view/5559
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