Board Size, Board Composition, and Firm Performance: Empirical Evidence from Germany

Abstract

We analyze the effects of supervisory board size and composition on the valuation and performance of all German firms listed in the DAX, MDAX and SDAX over the period 1998-2007 (n=294 companies with 2,382 firm-year-observations). Controlling for a large number of other (potential) determinants of firm performance we estimate the joint as well as the separate influence of board size, union representatives, works council representatives, independent worker representatives, bank representatives and former managing board members on firm performance. Contrary to most available studies we are unable to find a consistent effect of either board size or board composition on firm valuation and performance.

Keywords: Corporate Governance, Firm Performance, Codetermination

JEL Classification: G38, L25, J53