Does Board Size Really Matter? Evidence from Australia
| Main Author: | Setia-Atmaja, Lukas Y. |
|---|---|
| Format: | Article info application/pdf eJournal |
| Bahasa: | eng |
| Terbitan: |
Master of Management, Faculty of Economics and Business, Universitas Gadjah Mada
, 2008
|
| Online Access: |
https://jurnal.ugm.ac.id/gamaijb/article/view/5559 https://jurnal.ugm.ac.id/gamaijb/article/view/5559/4530 |
Daftar Isi:
- 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.