Timmer, the Philips CEO at the time, is on record [0] saying it had to do with the max recording length.
He claims Sony's CEO liked one particular recording of Beethoven's 9th so much, he insisted it had to fit on a CD. And this particular recording was 74mins, 33 seconds.
Immink says the myth is that Sony exec Ohga's wife insisted on the 74 minute length, based on a very slow performance of Beethoven 9, which normally isn't that long. But he also says it's not true. This is in his classic paper on the history of the CD.
He claims Sony's CEO liked one particular recording of Beethoven's 9th so much, he insisted it had to fit on a CD. And this particular recording was 74mins, 33 seconds.
[0] https://www.youtube.com/watch?v=kytmE4mrXWM, Dutch
edit: It was not Timmer, but Kees Immink and Hans Mons @ 8:25