Determinants of the Size of Board of Directors: Evidence from Jordanian Corporation

Abstract

This study aims to examine association between one of the most important corporate governance mechanisms; the size of boards of directors and firm characteristic factors, namely; firm's size, firm's age, firm's leverage and firm's profitability.

To achieve this objective of the study, the data were collected from a sample of 21 industrial Jordanian companies listed in Amman stock exchange for the period 2005 – 2012.

To test the hypotheses of the study, multiple linear regression analysis using SPSS 16.0 was utilized.

The regression analysis confirmed a significant relation between the size of boards and firm characteristic factors. In particular, the results confirm a significantly positive relation between the board size and firm's size proxy. While firm's age, firm's leverage ratio and firm's profitability are significantly negative in  relation to the boards  size.

These results  suggests that further research should be done regarding other corporate governance mechanisms such as; board composition, chief executive status. And also regarding other factors that may help in determining the  size of board of directors.

This study will contribute by its results which have important implications for investors, decision makers and regulator on corporate governance in Jordan were they going on reform of corporate boards.

Keywords: corporate governance, board of directors size, Jordan.