Optimum Board Size to Achieve Optimal Performance in Indonesia

• Main Authors: Komang Ayu Krisnadewi, Noorlailie Soewarno, Dian Agustia
• Format: Article PeerReviewed
• Language: English; Indonesian; English
• Published: Korea Distribution Science Association (KODISA) 2020
• Subjects: H Social Sciences; HF5601 Accounting
• Online Access: http://repository.unair.ac.id/106222/1/NoorlailieS_Karil15.5-Optimum%20Board%20Size.pdf; http://repository.unair.ac.id/106222/2/NoorlailieS_PeeReview15.5.pdf; http://repository.unair.ac.id/106222/3/NoorlailieS_Similarity15.5_Optimum%20Board%20Size.pdf; http://repository.unair.ac.id/106222/; https://www.koreascience.kr/article/JAKO202032462596928.view?orgId=kodisa; https://doi.org/10.13106/jafeb.2020.vol7.no11.231
• Institution: Universitas Airlangga

The aim of this paper is to review the role of board size as part of the corporate governance system. This paper discusses one aspect of corporate governance, namely, boards, in the Indonesian context. Using the literature review method, this paper explores factors that need to be considered to determine the optimal number of boards, especially in Indonesia. We explore some determinants of board size, such as complexity and leverage, ownership structure, and financial ratio support. The results reveal that an understanding of the differences found in the two-tier board model helps us understand that the different functions of the board of commissioners and the board of directors require different test treatments from countries that adhere to one-tier systems. A review of the relationship between board size and company performance is expected to provide the corporate governance literature with insights into optimizing the sizes of boards that can improve company performance, both in terms of boards of commissioners and boards of directors. This paper proposes the simultaneous testing of board size's relationship with company performance. The results of this study are expected to make a more real contribution about the effect of board size on company performance.