CEO DUALITY AND FIRM PERFORMANCE: WHAT'S THE FUSS?

CEO DUALITY AND FIRM PERFORMANCE: WHAT'S THE FUSS? Rising shareholder activism following poor corporate performance and a subsequent drop in shareholder value at many major U.S. corporations had rekindled interest in duality and corporate governance. 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 changing environment. In examining the relationship between duality and firm performance, this study considers the announcement effects of changes in duality status, accounting measures of operating performance for firms that have changed their duality structure, and long‐term measures of performance for firms that have had a consistent history of a duality structure. Our results suggest that: (1) the market is indifferent to changes in a firm's duality status; (2) there is little evidence of operating performance changes around changes in duality status; and (3) there is only weak evidence that duality status affects long‐term performance, after controlling for other factors that might impact that performance. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Strategic Management Journal Wiley

CEO DUALITY AND FIRM PERFORMANCE: WHAT'S THE FUSS?

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Publisher
Wiley
Copyright
Copyright © 1996 John Wiley & Sons, Ltd.
ISSN
0143-2095
eISSN
1097-0266
DOI
10.1002/(SICI)1097-0266(199601)17:1<41::AID-SMJ784>3.0.CO;2-#
Publisher site
See Article on Publisher Site

Abstract

Rising shareholder activism following poor corporate performance and a subsequent drop in shareholder value at many major U.S. corporations had rekindled interest in duality and corporate governance. 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 changing environment. In examining the relationship between duality and firm performance, this study considers the announcement effects of changes in duality status, accounting measures of operating performance for firms that have changed their duality structure, and long‐term measures of performance for firms that have had a consistent history of a duality structure. Our results suggest that: (1) the market is indifferent to changes in a firm's duality status; (2) there is little evidence of operating performance changes around changes in duality status; and (3) there is only weak evidence that duality status affects long‐term performance, after controlling for other factors that might impact that performance.

Journal

Strategic Management JournalWiley

Published: Jan 1, 1996

References

  • Measuring security price performance
    Brown, Brown; Warner, Warner
  • Corporate board size, composition and corporate failures in retailing industry
    Chaganti, Chaganti; Mahajan, Mahajan; Sharma, Sharma
  • CEO duality and organizational performance: A longitudinal analysis
    Rechner, Rechner; Dalton, Dalton

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