Keyword

Optimal Board Size - Accounting Performance – Jordan - Banks.

Abstract

The aim of this paper is to examine the optimal board size in the Jordanian banking sector with a focus on the accounting performance using a panel data from 2004 to 2013. In general, we find that the board size and bank performance are related but not at a significant level. Interestingly, we find that neither too small boards nor too large boards are effectively enhancing the bank accounting performance. The study concludes that the optimal board size is between 9 to 12 directors. Boards with less than nine directors are found to be insignificantly related to the bank performance while boards with more than 12 members are significantly and negatively related to the performance. Currently, the corporate governance codes suggest the board to be at least five directors and not more than 13 directors. Thus, this study suggests the policy makers to limit the size of the board to 9-12 directors only.


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