IIRC, Baldur's Gate used fairly accurate 2nd Edition AD&D Rules.
In 2nd Edition AD&D, the size of the shield translated into the number of attacks per round that the shield provided an armor bonus against.
E.g. a small shield would provide a +1 bonus (+/- any magical modifiers) to only the first attack in that round. A medium shield could be used to block against more attacks per round than a small, and a large more than a medium.
The downsides of larger shields are weight restrictions (the bigger they are, the heavier), and class restrictions (some classes are restricted to small shields.
I could find no reference to indicate whether BG implemented this rule. However, this site shows that larger shields provide additional bonuses against missle attacks.
Armor/Shield Armor Class Usable By
Buckler -1, no protection from piercing and missiles F/R/P/Th/B/C/Dr
Small shield -1, no protection from missiles F/R/P/C
Medium shield -1, protection from missiles F/R/P/C
Large shield -1, –2 protection from missiles F/R/P/C