53 Pages Posted: 1 Jun 2009 Last revised: 29 Jan 2010
Date Written: December 16, 2009
We document that firms that are larger, have stronger governance and more able CEOs are more likely to combine CEO and board chair roles (i.e., duality). We also document that firms that split these roles have significantly lower announcement and post-announcement returns, and lower contributions of investments to shareholder wealth. This result is more pronounced for firms that split due to investor pressure, and performance outcomes are more negative for firms with higher predicted values of duality based on our economic determinants model. Our evidence suggests that recent proposals for splitting the roles for all firms warrant more careful consideration.
Keywords: CEO duality; corporate governance; board chair; firm performance, investments
JEL Classification: G30, G38
Suggested Citation: Suggested Citation
Dey, Aiyesha and Engel, Ellen and Liu, Xiaohui, CEO and Board Chair Roles: To Split or Not to Split (December 16, 2009). Chicago Booth Research Paper No. 09-23. Available at SSRN: https://ssrn.com/abstract=1412827