Journal
JOURNAL OF FINANCIAL ECONOMICS
Volume 87, Issue 1, Pages 157-176Publisher
ELSEVIER SCIENCE SA
DOI: 10.1016/j.jfineco.2006.10.006
Keywords
boards of directors; corporate governance
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This study provides empirical evidence that firms with larger boards have lower variability of corporate performance. The results indicate that board size is negatively associated with the variability of monthly stock returns, annual accounting return on assets, Tobin's Q, accounting accruals, extraordinary items, analyst forecast inaccuracy, and R&D spending, the level of R&D expenditures, and the frequency of acquisition and restructuring activities. The results are consistent with the view that it takes more compromises for a larger board to reach consensus, and consequently, decisions of larger boards are less extreme, leading to less variable corporate performance. (c) 2007 Elsevier B.V. All rights reserved.
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