Competition for Managers and Corporate Governance

Acharya, Viral V.; Gabarro, Marc; Volpin, Paolo F.

doi:10.2139/ssrn.1572994

Download This Paper

Open PDF in Browser

Add Paper to My Library

Competition for Managers and Corporate Governance

European Corporate Governance Institute (ECGI) - Finance Working Paper No. 399/2014

AFA 2011 Denver Meetings Paper

61 Pages Posted: 19 Mar 2010 Last revised: 26 Nov 2018

See all articles by Viral V. Acharya

Viral V. Acharya

New York University (NYU) - Leonard N. Stern School of Business; New York University (NYU) - Department of Finance; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); National Bureau of Economic Research (NBER)

Marc Gabarro

Erasmus University

Paolo F. Volpin

Drexel University - Bennett S. LeBow College of Business; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); City University London - Faculty of Finance

There are 3 versions of this paper

Date Written: October 1, 2016

Abstract

Separation between CEO and Chairman of the Board is typically viewed as evidence of good corporate governance. Surprisingly, the literature has failed so far to uncover any significant relation between CEO/Chairman duality and firm performance. By distinguishing between periods with and without CEO turnover, we empirically identify two offsetting effects: the correlation between duality and performance is positive around CEO turnover and negative otherwise. This suggests that the competition for managerial talent forces firms to combine CEO and Chairman in order to attract more skilled CEOs at the cost of reducing governance standards.

Keywords: corporate governance, executive compensation, separate CEO and Chairman.

JEL Classification: G3

Suggested Citation: Suggested Citation

Acharya, Viral V. and Acharya, Viral V. and Gabarro, Marc and Volpin, Paolo F., Competition for Managers and Corporate Governance (October 1, 2016). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 399/2014, AFA 2011 Denver Meetings Paper, Available at SSRN: https://ssrn.com/abstract=1572994 or http://dx.doi.org/10.2139/ssrn.1572994