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Firms’ Rationales for CEO Duality: Evidence from a Mandatory Disclosure Regulation

European Corporate Governance Institute (ECGI) - Finance Working Paper No. 598/2019

60 Pages Posted: 14 Feb 2019

See all articles by Marc Goergen

Marc Goergen

IE Business School, IE University; European Corporate Governance Institute (ECGI)

Peter Limbach

University of Cologne and Centre for Financial Research (CFR)

Meik Scholz-Daneshgari

Karlsruhe Institute of Technology

Date Written: February 8, 2019

Abstract

Exploiting the 2009 amendments to Regulation S-K, we provide unique evidence on the first-time disclosure of the reasons firms state for combining (separating) the roles of CEO and chairman. The stated reasons support both agency theory and organization theory. They are more numerous and comprise more words, including more positive words, for firms with duality. Examining the announcement returns to firms’ disclosures, we find that investors evaluate the most frequently cited reasons for CEO duality by considering the firm’s characteristics.

Keywords: CEO Duality, Board of Directors, Corporate Governance, Regulation S-K, Textual Analysis

JEL Classification: G14, G34, G38

Suggested Citation

Goergen, Marc and Limbach, Peter and Scholz-Daneshgari, Meik, Firms’ Rationales for CEO Duality: Evidence from a Mandatory Disclosure Regulation (February 8, 2019). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 598/2019. Available at SSRN: https://ssrn.com/abstract=3331086 or http://dx.doi.org/10.2139/ssrn.3331086

Marc Goergen (Contact Author)

IE Business School, IE University ( email )

Finance Department
Maria de Molina, 12
Madrid, 28006
Spain

HOME PAGE: http://www.ie.edu/business-school/faculty-and-research/faculty/marc-goergen/

European Corporate Governance Institute (ECGI) ( email )

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

HOME PAGE: http://www.ecgi.org

Peter Limbach

University of Cologne and Centre for Financial Research (CFR) ( email )

Albertus-Magnus-Platz
Köln, 50923
Germany

HOME PAGE: http://www.finance.uni-koeln.de

Meik Scholz-Daneshgari

Karlsruhe Institute of Technology ( email )

Kaiserstraße 12
Karlsruhe, Baden Württemberg 76128
Germany

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