A New Finding for Board Size Effects

Several papers have reported board size effects and concluded that firm performance is going down as the board size goes larger. This paper investigates board size effects using the data of Japanese companies which have a larger size than companies in other countries in general. The sample of Japanese companies provides us a very wide range of board sizes which is different from the samples in other papers so that we can capture something which is neglected in other papers. We find a significantly positive relation between board size and profitability when board size is moderate, but a significantly negative relation between board size and profitability when board size still goes larger. Thus, our new finding for board size effects to some extent reconciles some opposing opinions.