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Optimal Board Size and University Governance

Author

Listed:
  • John Levendis

    (Tulane University)

  • Mehmet F. Dicle

    (Loyola University New Orleans)

Abstract

We argue that there is an optimal size for University boards of trustees. This is due to the confluence of two opposing factors. First, university boards face decreasing marginal benefits to expanding their size. Second, because of the classic “free-rider problem”, they also have increasing marginal costs. These two traits together imply that there is an optimal number of trustees in a University’s board. We look at a large sample of US universities from 2014-2022 to examine this hypothesis and find a well-defined optimal size for University boards: universities with between 50 and 60 board members (and only one or two internal or “non-independent” members) exhibit the healthiest financial performance.

Suggested Citation

  • John Levendis & Mehmet F. Dicle, 2026. "Optimal Board Size and University Governance," Journal of Economic Insight, Missouri Valley Economic Association, vol. 52(1), pages 45-70.
    • Handle: RePEc:mve:journl:v:52:y:2026:i:1:p:45-70
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    More about this item

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

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