Higher market valuation of companies with a small board of directors

  title={Higher market valuation of companies with a small board of directors},
  author={D. Yermack},
  journal={Journal of Financial Economics},
  • D. Yermack
  • Published 1996
  • Business
  • Journal of Financial Economics
  • I present evidence consistent with theories that small boards of directors are more effective, Using Tobin’s Q as an approximation of market valuation, I find an inverse association between board size and firm value in a sample of 452 large U.S. industrial corporations between 1984 and 1991. The result is robust to numerous controls for company size, industry membership, inside stock ownership, growth opportunities, and alternative corporate governance structures. Companies with small boards… CONTINUE READING
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