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

28 Pages Posted: 11 Jul 2011

See all articles by Matteo P. Arena

Matteo P. Arena

affiliation not provided to SSRN

Stephen P. Ferris

University of Missouri at Columbia - Department of Finance

Emre Unlu

University of Nebraska at Lincoln

Date Written: August 2011

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 suggests 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, G3, G34

Suggested Citation

Arena, Matteo P. and Ferris, Stephen P. and Unlu, Emre, It Takes Two: The Incidence and Effectiveness of Co‐CEOs (August 2011). Financial Review, Vol. 46, Issue 3, pp. 385-412, 2011. Available at SSRN: https://ssrn.com/abstract=1882146 or http://dx.doi.org/10.1111/j.1540-6288.2011.00305.x

Matteo P. Arena (Contact Author)

affiliation not provided to SSRN

No Address Available

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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