Title: Empirical evidence on optimal board size for Indian listed companies

Authors: Akshita Arora

Addresses: Apeejay School of Management, New Delhi, India

Abstract: The internal corporate governance mechanisms are under the purview of academic research since many decades and board size is an important mechanism to ensure that the company is well-governed. The objective of our study is to determine optimal board size for Indian listed companies. For estimation purpose and robustness checks, panel OLS and random effects method have been employed on a sample set of 442 listed companies. It was observed that more than 60% of the companies in our sample have board size between 8 and 12 members throughout the sample period. We suggest that board should consist of not less than eight directors but limited to 12 members to have positive relation with firm performance. The board size should not be too small or too large but should be equipped with vital expertise and diversity for healthy decision-making.

Keywords: corporate governance; optimal board size; panel data; firm performance; random effects; board of directors; India.

DOI: 10.1504/IJCG.2020.115515

International Journal of Corporate Governance, 2020 Vol.11 No.3/4, pp.341 - 353

Received: 17 Sep 2020
Accepted: 04 Feb 2021
Published online: 07 Jun 2021 *

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