Using the Panel Data Analysis to Test the Nexus of Board Size and Firm Performance for JSE-Listed Financial Companies

Effective corporate governance is vital to financial stability in South Africa, yet the optimal board structure remains contested. The objective of this study is to investigate the relationship between board size and firm performance, using panel data from 25 Johannesburg Stock Exchange (JSE) listed financial firms over the 2015 to 2021 period. Using the Feasible Generalized Least Squares (FGLS) model, the study finds nuanced effects of board size on firm performance. Larger boards are positively associated with EPS, Tobin’s Q, and MVA, suggesting enhanced oversight and investor confidence. However, board expansion negatively affects ROA, and has no significant impact on shareholder return efficiency. These findings stress a central paradox: board enlargement contributes positively to capital market valuation but may simultaneously undermine asset utilisation and managerial responsiveness. The study advances the governance discourse by arguing for size agility in regulatory prescriptions and urging investors to critically evaluate board expansion beyond efficiency thresholds. In doing so, it provides empirical clarity on a longstanding governance dilemma and contributes to the broader understanding of how board structures shape financial performance in emerging markets.