Conversely, ceo duality exhibits a positive effect on firm performance when board involvements are high, a finding that supports the commonalities of the agency and stewardship theoretical perspectives. Since the second half of the 20th century, a long debate on ceo and chairman duality referred to as ceo duality and its impact on firm performance has been taking place 1 2. The relationship between board size and ceo duality and firm. Ceo duality and firm performance revisited ali mohammadi1, nada o. Using data from 192 firms in 12 industries, both the direction and magnitude of the duality. The results suggest that ceo duality is a less significant issue in corporate governance than suggested by many previous. This is an interesting case sector, as a growing number of shipping companies are seen to go public on international capital markets, shifting away from their founding familyrun model. The empirical results show that ceo duality is negatively correlated with firm performance in nigeria irrespective of the firms ownership structure. Pdf several studies have addressed the ceo dualityperformance relationship, with inconsistent results. Data from proprietary assessments that rate each candidate on 30 dimensions. Ceo duality and firm performance revisited semantic scholar.
The essence of stewardship theory as an explanatory lens of management lies in how a ceos role in the firm is viewed. We retest boyds hypotheses using a database of over 11,000 swedish firms from the year 2005 to 2009. Ceo duality, agency costs, and internal capital allocation. This paper studies the effect of ceo duality on firm performance using an exogenous shock to the competitive environment. Ceo duality structure and firm performance in pakistan. Our sample includes the 100 largest and 100 smallest companies in the fortune in 2016. Suggested citation ramdani, dendi and van witteloostuijn, arjen, the impact of board independence and ceo duality on firm performance. View the article pdf and any associated supplements and figures for a period of 48 hours.
Ceo total pay positively impacts a firms return on assets and international performance, with power from ceo duality, directorship, or composite power being controlled. The impact of board independence and ceo duality on firm. Ceo duality asserting that it has a negative impact on firm performance. The exogenous shock is the 1989 canadaunited states free trade agreement fta, which eliminated all tariffs and other trade barriers between the two countries.
A quantile regression analysis for indonesia, malaysia, south korea and thailand. Additionally, we find a negative moderating effect of board size on the positive relationship between ceo duality and firm performance. The empirical results do not show a significant relationship between. Pdf impact of ceo duality and audit committee on firm. Nov 26, 2012 however, the literature provides mixed evidence on the relation between ceo duality and firm performance. The effects of board independence and ceo duality on firm. Lastly, we find a negative relationship between ceo duality and firm performance.
Ceo duality refers to a board leadership structure in which the chief executive officer ceo is the chairman of the board cob. The findings give credence to the recommendation of the peterside commission on the need to separate the position of ceo from board chair. Whether dual ceo leadership structure is better for corporations is one of the most hotly debated issues in corporate finance. This study contributes to the literature on ceo duality and firm performance in. Tina yanga, shan zhaob aschool of business, villanova university, villanova, pa usa. Ceo duality, organizational slack, and firm performance in. Agency theory suggests that ceo duality is bad for performance because it compromises the monitoring and control of the ceo. The impact of board independence and ceo duality on firm performance. Against the idea of ceo duality, the agency theory is advanced.
Multiple regression analysis is used to analyze the data collected from a sample of 212 large scale publicly listed companies representing 20 sectors in the colombo stock. Jun, 2008 this paper seeks to examine the relationship between chief executive officer ceo duality and firm performance and the moderating effects of the family control factor on this relationship with respect to public companies in hong kong. This study seeks to extend the above studies by analyzing data from canadian service firms. Jun 03, 2016 additionally, we find a negative moderating effect of board size on the positive relationship between ceo duality and firm performance. Oriana bandiera london school of economics andrea prat columbia university stephen hansen university of oxford ra. A quantile regression analysis for indonesia, malaysia. This result provides evidence for the coexistence of the agency hypothesis and stewardship hypothesis as determined by the extent of the information costs, and it tends to underscore the importance of corporate governance on the relationship between ceo duality and firm performance. Introduction ceo duality, which is known as one person holds both the ceo chairman positions boyd.
The empirical results do not show a significant relationship between ceo duality and firm performance in. The paper investigates the impact of ceo dualityseparation on the financial performance of shipping firms. Ceo duality, information cost, and firm performance. A study of ceo power, pay structure, and firm performance. This paper replicates and extends the empirical work of boyds 1995 article. This study employs a cross sectional ordinary least square analysis of 128 firms listed in colombo stock exchange cse for the financial year ending 20. We retest boyds hypotheses using a database of over 11,000 swedish firms from the year. Despite limited empirical evidence, duality chairman of the board and ceo are the same individual has been blamed, in many cases, for the poor performance. This study uses the roa as proxy measure for form performance. In favor of ceo duality, the stewardship theory is advanced. Peng, zhang and li 2007 find that ceo duality may be especially valuable under.
One of the key topics in corporate governance is the link between ceo duality and firm performance. Therefore, whether ceo duality is good or not good to firm performance is an outstanding issue. Pdf the impact of board independence and ceo duality on. Ceo duality has significant impact on profit margin of firm. Empirical findings indicate that ceo duality is positively negatively related with performance. Sridharam and marsinko 19 studied the impact of ceo duality on the market value of the firm by examining the evidence from the paper and forest product industry, over the period. This paper uses a recent data to reexamine the relationship between ceo duality and firm performance, controlling for other important variables such as firm characteristics, ownership structure, ceo compensation, and agency costs. What matters between ceo duality and firm performance.
Corporate governance mechanisms and financial performance. Firm performance is measured using return on assets roa. Ceo duality and firm performance the ceo is a fulltime employee who holds the responsibility for the daily running of the firm as well as for setting and implementing corporate strategies. Nevertheless, it is worth noting, by using a contingency approach, boyd 1995 finds the positive impact of ceo duality on firm performance in high dynamism, low munificence, and high complexity environments. We analyze data for the nasdaq100 firms over the period 20102014. This paper argues that if boards and leadership structure are well in place and conform to the practices in other developed countries, the long. The empirical evidence, largely from developed economies, is largely inconclusive. This study explores the effect of ceo duality to achieve firm performance through the mediating effects of capital structure and market competition. This study examines if the ceo duality influences firm performance in bangladesh. Selfselection, endogeneity, and the relationship between ceo duality and firm performance.
The purpose of this study was to investigate this relationship. Ceo duality, organizational slack, and firm performance in china mike w. This current study is one of the few investigations to conduct a focalized examination of the relationship between ceo duality and firm performance. Ceo duality has significant impact on return on equity of firm. The relevance of these results is discussed from corporate governance policy. Advancing this research, we develop an integrative framework to address an important and previously underexplored question. The main criterion regarding the argument for or against ceo duality is the effect ceo duality has on firm performance. In previous studies many researchers argued that ceo duality and return on equity has significant weak relationship yasser, et al. However, the literature provides mixed evidence on the relation between ceo duality and firm performance.
Ceo duality, organizational slack, and firm performance in china. The impact of board size, ceo duality, and corporate. This study provides empirical evidence on the significance ceo. The moderating and mediating effects of corporate governance. Abstract exploiting two exogenous shocks, we examine the relation between ceochairman duality and firm performance. Kaymak and bektas 7 examined 27 turkish banks operating in the market between the years 20012004 and found a negative relationship between the ceo duality and firm performance. The chairperson leads the board of directors to ensure that the board performs effectively and he holds the responsibility for monitoring and evaluating. Aug 27, 2014 the paper investigates the impact of ceo duality separation on the financial performance of shipping firms. Ceo duality here refers to a firms chief executive officer that also serves as chairman of the board of directors boyd 1995.
Board composition, ceo duality and performance among. Despite limited empirical evidence, duality chairman of the board and ceo are the same individual has been blamed, in many cases, for the poor performance and failure of firms to adapt to a. Ceo duality has a negative impact on the firm performance, consistent with the agency theory. Ceo duality, information costs, and firm performance. This paper proposes that these inconsistencies can be resolved by integrating agency and stewardship perspectives on duality. Sustainability free fulltext the effects of market. The findings reveal that the concentration of power in a single hand and the ceo with vast experiences are unable to provide gratification on the firm performance. This paper examines the relationship between corporate governance mechanisms and performance of the firm. In the existing literature various arguments are made in favor and against ceo duality. These ceo characteristics are supported by the upper echelons theory and accountability theory. The effect of ceo duality on firm performance shrinks upon the addition of. Introduction ceo duality, which is known as one person holds both the. A ceo as a steward, signaled by shared incumbency of the roles of board chair and ceo, has a personal stake in the firm, and is. An endogenous issue article pdf available in corporate ownership and control 61 january 2008 with 947 reads how we measure reads.
Does ceo duality really affect corporate performance. In this empirical paper, audit committee and ceo duality are taken as corporate governance mechanisms and profit margin and return on equity are taken as a measure of performance of the firm for a sample of 11 listed firms of pakistan for year 20102011. Hence, and in general, ceo pay fails to significantly mediate the relationships between ceo power and firm performance. Ceo duality, agency theory, stewardship theory, firm performance 1. Ceo duality, organizational slack, and ownership types have been found to affect firm performance in china. Ceo duality exists where the roles of ceo and chairman of the board are held by the same person. This study examines the effects of board independence and ceo duality on firm performance. Finally there are also arguments that assert that ceo duality has no influence on the performance of the firm. This research investigates the relationship between ceo duality and firm performance in brazil. The findings, based on a sample of 1,974 publicly listed firms in taiwan, provide robust support for the mediating model. This paper proposes that these inconsistencies can be resolved by.
Their result showed that firms with ceo duality have superior performance in terms of margins. Jackling and johl 8 collected data from india and found that larger board size has. This study investigates the roles of board independence and ceo duality on a firms performance relying on financial ratios, namely roa, roe, eps and profit margin. This article examines the impact of ceo duality on firm performance of listed non financial firms in sri lanka. A contingency model article pdf available in strategic management journal 164. This paper seeks to examine the relationship between chief executive officer ceo duality and firm performance and the moderating effects of the family control factor on this relationship with respect to public companies in hong kong.
Introduction in the last years many firms converted from dual ceo leadership structure to nondual structure. Ceo duality, firm performance, agency theory, stewarship theory. The empirical results show that ceo duality is negatively correlated with firm performance in nigeria irrespective of the firm s ownership structure. Integration of micro and macro studies in governance. Impact of ceo duality and audit committee on firm performance. Board composition, ceo duality and firm performance.
The results show that ceo duality has a negative impact on the firm performance. Ceo duality, financial distress, average treatment effects. Ceo duality and firm performance the role of external. Stewardship theory, in contrast, argues that ceo duality may be good for performance due to the unity of command it presents. This study draws on the resource dependence theory to synthesize the conflicting arguments as well as commonalities of the agency and stewardship perspectives on the relationship between ceo duality and firm performance.
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