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This paper reexamines the effect of board composition and board size on Tobin's Q. We find that Tobin's Q increases in board size for firms that have greater advising requirements, such as diversified firms and high-debt firms. Also, Tobin's Q increases with fraction insiders in firms where the firm-specific knowledge of insiders is relatively more important, such as R&D intensive firms. Overall, our results challenge the traditional notion that only small boards with high fraction of outsiders are value-enhanc ing.

This paper reexamines the effect of board composition and board size on Tobin's Q. We find that Tobin's Q increases in board size for firms that have greater advising requirements, such as diversified firms and high-debt firms. Also, Tobin's Q increases with fraction insiders in firms where the firm-specific knowledge of insiders is relatively more important, such as R&D intensive firms. Overall, our results challenge the traditional notion that only small boards with high fraction of outsiders are value-enhanc ing.

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