Impact of board size on the accounting returns and the asset quality of Indian banks Ankur Shukla Indian Institute of Management Ranchi, Ranchi, India Sivasankaran Narayanasamy Xavier School of Management, Jamshedpur, India, and Ramachandran Krishnakumar GRD Institute of Management, Coimbatore, India Abstract Purpose – The purpose of the paper is to explore the impact of board size on the accounting returns and asset quality of Indian banks. Design/methodology/approach – This paper uses ordinary least squares regression, robust regression and panel data methods for estimation, based on data collected for a sample of 29 Indian banks that are listed on the National Stock Exchange (NSE) and form part of the NSE-500 index over a period of eight financial years 2009-2016. The data pertaining to the board size of the sample banks is collected from the annual reports of banks, whereas the data relating to return on assets (ROA) and ratio of the gross non-performing assets to total assets and control variables (bank age and bank size) is extracted from ACE Equity database. Findings – This paper concludes that the size of the governing board has a positive impact on the accounting returns (measured through ROA) of the Indian banks. Further, board size is observed to be insignificant in determining the asset quality of Indian banks. Originality/value – This paper contributes to the literature and practitioners in a number of ways. First, to the best of the authors’ knowledge, this is the first study on the impact of board size on the accounting returns and asset quality of Indian banks. The findings of the study contribute new theoretical insights to the body of knowledge on the influence of the size of the board, which may be useful for future researchers. Second, banks may enhance their financial performance by taking cognizance of the findings of this study. Finally, equity investors may make use of the findings of this article in deciding on whether to invest in a bank’s stock/lend to the bank based on board size of the bank. Keywords Board size, Accounting return of banks, Asset quality of banks, Indian banks Paper type Research paper 1. Introduction Corporate governance (CG) is defined “as the system by which companies are directed and controlled” (Cadbury Committee, 1992). Shleifer and Vishny (1997) state that CG deals with the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment. CG is positively related with the operating performance of the firms (Bhagat et al., 2008). CG has a positive impact on the firm value (La Porta et al., 2000; Gompers et al., 2003; Bebchuk and Cohen, 2003; Bebchuk et al., 2005; Brown and Caylor, 2006; Cremers et al., 2007), stock returns (Gompers et al., 2003) and helps in appropriate resource allocation in an economy, enhances the rate of innovation (Morck et al., 2005) and the growth rate of the economy. Several previous studies have considered board characteristics as proxies for CG (Brickley et al., 1997; Hermalin and Weisbach, 1998; Accounting returns and the asset quality Received 4 December 2018 Revised 25 January 2019 2 October 2019 Accepted 25 January 2020 International Journal of Law and Management © Emerald Publishing Limited 1754-243X DOI 10.1108/IJLMA-12-2018-0271 The current issue and full text archive of this journal is available on Emerald Insight at: https://www.emerald.com/insight/1754-243X.htm