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Competition for Managers and Corporate Governance

55 Pages Posted: 19 Mar 2010 Last revised: 15 Nov 2016

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

Marc Gabarro

University of Mannheim Business School

Paolo F. Volpin

City University London - Faculty of Finance; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Multiple version iconThere 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 o setting 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

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

Viral V. Acharya

New York University - Leonard N. Stern School of Business ( email )

44 West 4th Street
New York, NY NY 10012
United States

HOME PAGE: http://pages.stern.nyu.edu/~sternfin/vacharya/public_html/~vacharya.htm

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

New York University (NYU) - Department of Finance

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States

Marc Gabarro (Contact Author)

University of Mannheim Business School ( email )

L9, 1-2
Mannheim, 68131
Germany

Paolo F. Volpin

City University London - Faculty of Finance ( email )

London, EC2Y 8HB
Great Britain

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http:/www.ecgi.org

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