The relationship between board size and performance of banks in the Indian context is assessed in this study. The paper also analyzes the effect of other corporate governance factors on performance. While many factors have been identified as components of corporate governance, only three of them are employed in this study. Furthermore, firm performance variables are taken as the control variables. The studies have indeed proved that firm value is also based on performing factors. It is observed in the study that the operationalization of the two ratios Market-to-Book and Tobin's Qmight trigger its validity. The absence of the effect of board size on performance of bank in the Indian context, as revealed in the study, is a challenge for researchers in this area.

The available literature on corporate governance¹ documents the emergence of empirical works on the effect of board on the performance of firms. Some of the major topics covered, include the relation between firms' performance and the structure of board (Adams and Mehran, 2002; Hayes, Mehran and Schaefer, 2005; Bhagat and Black, 2002; Morck et al. 1988; McConnell and Servaes, 1990; Brickley et al. 1997) and the size of board (Mak and Yuanto, 2004; Eisenberg et al. 1998).

Several studies have documented the effect of board size on the performance of firms. Lipton and Lorsch (1992) and Jensen (1993) suggested that larger boards are less effective than smaller boards due to the coordination problems in larger boards. They recommended limiting the membership of boards to ten people, with a preferred size of eight or nine. He explained that even if boards' capacities for monitoring increases with board size, the benefits are outweighed by such costs, as slower decision-making, less-candid discussions of managerial performance, and biases against risk-taking. Jensen (1993) took this theme and stated that "when boards get beyond seven or eight people they are less likely to function effectively and are easier for the CEO to control". Yermack (1996) and Eisenberg, Sundgren, and Wells (1998) provided evidence that smaller boards are associated with higher firm value, as measured by Tobin's Q. Hermalin and Weisbach (2001) argued that board composition is not related to corporate performance and board size is negatively related to corporate performance.