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

60 Pages Posted: 14 Feb 2019 Last revised: 13 Jul 2021

See all articles by Marc Goergen

Marc Goergen

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

Peter Limbach

University of Bielefeld; Centre for Financial Research (CFR)

Meik Scholz-Daneshgari

Karlsruhe Institute of Technology

Date Written: February 8, 2019

Abstract

Exploiting the 2009 amendments to Regulation Ssingle bondK, we provide unique evidence on the first-time disclosure of the reasons firms state for combining or separating the roles of CEO and chairman. The stated reasons support both agency theory and organization theory. They are more numerous, comprise more words, and have a more positive tone 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 firm's characteristics. Our evidence enhances the understanding of firms' endogenous decision to opt for CEO duality and its value consequences.

Keywords: Board leadership, CEO duality, Corporate governance, Regulation S-K, Stock returns, 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, Journal of Corporate Finance, Vol. 65, 2020, 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 the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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

Peter Limbach

University of Bielefeld ( email )

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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