The purpose of this study is to examine the relation between the boards of directors' characteristics and operating performance in the top business groups in Taiwan during 2003-2005. This research adopts the duality of chairman and CEO, board size, ratio of independent directors, outside director percentage and pledged shares ratio of directors' and supervisors' shareholdings as independent variables, with return on assets and return on equity as dependent variables. We use the panel data regression model to assess the effect of these variables on operating performance. The empirical result shows that the size of the board smaller and the ratio of outside directors higher would promote the return on assets. The board size smaller, the ratio of outside directors higher, and the ratio of pledged share lower would have significant positive effects on return on equity.