Does CEO Duality is Really Matter? Evidence from an Emerging Market
Corporate Ownership & Control, Vol. 8, No. 4, Summer 2011
23 Pages Posted: 3 Aug 2011
Date Written: May 29, 2011
Abstract
The relationship between board leadership, firm financial performance and agency costs is examined on behalf of a sample of multinational company subsidiaries (MNCs) and local public companies (LPCs) in Sri Lanka. Five years of data for 86 MNC subsidiaries and 113 LPCs, are collected and observations are analyzed using a dynamic panel GMM estimation. This study provides empirical support for stewardship theory and contingency theory when firms are multinational subsidiaries. Moreover, findings support agency theory when firms are local public companies. Finally, this study indicates that there is no optimal board leadership structure. Hence, when companies commence their exploration of corporate governance practices, firms need to recognized that firm characteristics and contingency perspective boost the impact of board leadership structure on corporate financial performance.
Keywords: CEO duality, financial performance, agency costs, emergin market
JEL Classification: G32
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