An empirical test of the effect of board size on firm efficiency

Empirical tests of the effectiveness of the U.S. corporate governance structure have been hampered by a lack of suitable data. This paper suggests the use of data from an industry which has publicly available data on firm costs, rural distributors of electricity. Data from this industry are sufficiently detailed enough to allow for the construction of a variable cost function. A test of the influence of board size on firm efficiency indicates that corporate boards are inefficiently large.