Research Journal of Finance and Accounting www.iiste.org ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online) Vol.10, No.24, 2019 127 Board Size and Financial Performance of Commercial Banks in Kenya Caleb Bw’Auma Manyaga*, Prof. Willy Muturi, Dr. Oluoch Oluoch School of Business, Department of Economics, Accounting and Finance, Jomo Kenyatta University of Agriculture and Technology, P.O. Box 62000, 00200, City Square, Nairobi, Kenya Abstract Board of directors are individuals appointed to oversee the operations of the firm by shareholders. They ensure that operations of the firm are carried out in a more effective manner. Board size as part of board characteristics contributes positively to the firm’s financial performance. Due to agency problems, board size had been expanded to incorporate a variety of expertise and interest groups. However, there is no one board size fit all, the size is determined by the industry and the country of operation. Begging the need for examination of the influence of board size on return on equity of commercial banks operating in Kenya. The target population was 43 commercial banks in operation in Kenya as at 31st December 2017. Secondary data on board size as independent variable and return on equity as a dependent variable for 34 commercial banks for the years 2008 to 2017 was obtained from the internet and perusal of the annual accounts of the individual commercial banks. The study adopted causal research design. Using STATA Version 13 to analyse data, the study used2W both descriptive and inferential statistics. Based on the analysis, the study concluded that overall, board size had a negative but significant influence on return on equity on commercial banks in Kenya. The study also found that board size had a positive and significant influence on return on equity across time. However, in regard to time, board size had a negative but significant variability on return on equity across time. In the case of across banks, board size had a negative but significant influence on return on equity across banks. In consideration of the individual banks, board size had a positive and significant variability on return on equity across banks. The third aspect of groupings, board size had insignificant influence on return on equity across peer. While on individual groups, board size had a positive and significant variability on return on equity across peer. The study recommended a board size of between 6 and 10 board members to embrace a mixture which caters for various interests to facilitate better financial performance. Keywords: Board Size, Return on Equity, Commercial Banks in Kenya DOI: 10.7176/RJFA/10-24-14 Publication date: December 31 st 2019 1. Heading The banking sector is the backbone of the economy in facilitating financing activities to all sectors. The sector facilitates growth and stability in the economy which grows faster than GDP (Tomsik, 2014). In the Kenyan perspective in the year 2016, commercial banks had a combined total assets Kshs 3.7 Trillion and total revenue Kshs 502 Billion (CBK, 2016). The banking sector is under the supervision of the Central Bank of Kenya (CBK) which is mandated to regulate the industry. Towards this end, the regulator clarified and enhanced regulatory guidance on critical areas such as corporate governance, disclosures, improved quality of assets, and integrity of ICT systems (CBK, 2016). According to CBK (2013) shareholders are to ensure credible board members are appointed who are to add value to the bank. They should also hold the board accountable and responsible for effective and efficient corporate governance of the commercial bank. Wessels and Wansbeek, (2016) posits that corporate governance is the control, direction and exercising authority in a firm. Brown and Casey (2012) further states that corporate governance are the controls of public businesses consisting of both legal and non- legal practices and principles of running the business. Through corporate governance, the board prepares strategies, procedures, programs and policies that guide management in their day to day actions in the firm thus aligning the interests and actions of the management to that of the corporate (Blair & Knight, 2013). Studies have revealed that board characteristics have contributed positively to firm performance (Terjesen, Couto & Francisco (2015). According to OECD, through enforcement of good corporate governance in a firms would spur economic growth