CEO Duality and Firm Performance: What's the Fuss?

Posted: 26 Oct 1999

See all articles by R. Charles Moyer

R. Charles Moyer

University of Louisville - College of Business and Public Administration

Ramesh P. Rao

Oklahoma State University - Stillwater - Spears School of Business - Department of Finance

B. Ram Baliga

Wake Forest University - Babcock Graduate School of Management

Abstract

Rising shareholder activism following poor corporate performance and a subsequent drop in shareholder value at many major U.S. corporations has rekindled interest in duality and corporate governance. Despite limited empirical evidence, duality (chairman of the board and CEO are the same individual) has been blamed, in many cases, for the poor performance and failure of firms to adapt to a changing environment. In examining the relationship between duality and firm performance, this study considers the announcement effects of changes in duality status, accounting measures of operating performance for firms that have changed their duality structure, and long-term measures of performance for firms that have had a consistent history of a duality structure. Our results suggest that: (1) the market is indifferent to changes in a firm's duality status; (2) there is little evidence of operating performance changes around changes in duality status; and (3) there is only weak evidence that duality status affects long-term performance, after controlling for other factors that might impact that performance.

JEL Classification: G3

Suggested Citation

Moyer, R. Charles and Rao, Ramesh P. and Baliga, B. Ram, CEO Duality and Firm Performance: What's the Fuss?. STRATEGIC MANAGEMENT JOURNAL. Available at SSRN: https://ssrn.com/abstract=5962

R. Charles Moyer (Contact Author)

University of Louisville - College of Business and Public Administration ( email )

Louisville, KY 40292
United States

Ramesh P. Rao

Oklahoma State University - Stillwater - Spears School of Business - Department of Finance ( email )

Spears School of Business
Stillwater, OK 74078-4011
United States
405-744-1385 (Phone)
405-744-5180 (Fax)

B. Ram Baliga

Wake Forest University - Babcock Graduate School of Management ( email )

Winston-Salem, NC 27106
United States

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