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It Takes Two: The Incidence and Effectiveness of Co-CEOs

Financial Review, Forthcoming

44 Pages Posted: 12 Feb 2011 Last revised: 16 Feb 2011

Matteo P. Arena

Marquette University

Stephen P. Ferris

University of Missouri at Columbia - Department of Finance

Emre Unlu

University of Nebraska at Lincoln

Abstract

This study examines the phenomenon of co-CEOs within publicly traded firms. Although shared executive leadership is not widespread, it occurs within some very prominent firms. We find that co-CEOs generally complement each other in terms of educational background or executive responsibilities. Our results show that firms most likely to appoint co-CEOs have lower leverage, a more limited firm focus, less independent board structure, fewer advising directors, lower institutional ownership and greater levels of merger activity. The governance structure of co-CEO firms suggest that co-CEOships can serve as an alternative governance mechanism, with co-CEO mutual monitoring substituting for board or external monitoring and co-CEO complementary skills substituting for board advising. An event study indicates that the market reacts positively to appointments of co-CEOs while a propensity score analysis shows that the presence of co-CEOs increases firm valuation.

Keywords: CEOs, Shared Leadership, Co-CEOs, Corporate Governance

JEL Classification: G3, G34

Suggested Citation

Arena, Matteo P. and Ferris, Stephen P. and Unlu, Emre, It Takes Two: The Incidence and Effectiveness of Co-CEOs. Financial Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1759477

Matteo P. Arena (Contact Author)

Marquette University ( email )

College of Business Administration
P.O. Box 1881
Milwaukee, WI 53201-1881
United States

Stephen P. Ferris

University of Missouri at Columbia - Department of Finance ( email )

214 Middlebush Hall
Columbia, MO 65211
United States
573-882-6272 (Phone)
573-884-6296 (Fax)

Emre Unlu

University of Nebraska at Lincoln ( email )

Lincoln, NE 68588
United States

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