55 Pages Posted: 19 Mar 2010 Last revised: 15 Nov 2016
Date Written: October 1, 2016
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.
Keywords: corporate governance, executive compensation, separate CEO and Chairman.
JEL Classification: G3
Suggested Citation: Suggested Citation
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
By Kevin Murphy