Does Board Size Matters? New Evidence from a Two-Tier Board System

  • Salim Darmadi Indonesian College of State Accountancy (STAN), Tangerang Selatan, Indonesia


The objective of this study is to examine the association between board sizeand firm value using the setting of a developing economy that adopts a twotierboard system. Hence, the present study extends the existing literaturewhich heavily focuses on economies adopting unitary board structure.Employing a sample of non-financial companies listed on the IndonesiaStock Exchange (IDX), we perform regression analyses separately for thesupervisory board and the management board. Using return on assets (ROA)and Tobin’s Q as measures of firm value, our results support the propositionthat board size and firm value are positively associated. Across differentmodels and estimation techniques, the relationship of board size to Tobin’s Qis more robust than that to ROA. Our further analysis also reveals that largerboard size is more likely to be employed by larger firms, which benefit fromhaving larger boards. It is suggested that listed companies need to carefullyarrange their board structure in their efforts to maximize firm value.
Jun 30, 2014
How to Cite
DARMADI, Salim. Does Board Size Matters? New Evidence from a Two-Tier Board System. Management & Accounting Review (MAR), [S.l.], v. 13, n. 1, p. 45-73, june 2014. ISSN 2550-1895. Available at: <>. Date accessed: 30 nov. 2022. doi: