Competition for Managers and Corporate Governance
Viral V. Acharya
New York University - Leonard N. Stern School of Business; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER); New York University (NYU) - Department of Finance
Paolo F. Volpin
City University London - Faculty of Finance; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)
June 1, 2016
European Corporate Governance Institute (ECGI) - Finance Working Paper No. 399/2014
AFA 2011 Denver Meetings Paper
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 osetting 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.
Number of Pages in PDF File: 49
Keywords: corporate governance, executive compensation, separate CEO and Chairman.
JEL Classification: G3
Date posted: March 19, 2010 ; Last revised: July 6, 2016