Board Antecedents of CEO Duality and the Moderating Role of Country‐level Managerial Discretion: A Meta‐analytic Investigation

Abstract

CEO duality reduces boards’ monitoring capacity. But governance substitution theory holds that boards of directors who can effectively monitor their CEOs are more likely to adopt the CEO duality governance structure. By examining relationships between board characteristics underlying their monitoring capacity and CEO duality, we bring evidence to bear on governance substitution theory. Further, by applying a managerial discretion theory lens to CEO duality, we extend governance substitution theory to the cross‐country context where institutional features vary in their constraints on managerial discretion. Meta‐analytic results from a dataset of 297 studies across 32 countries/regions provided support for the majority of our predictions. As predicted, board independence and certain types of board human capital were positively related to CEO duality. Unexpectedly, board ownership was negatively related to CEO duality. Additionally, country‐level managerial discretion significantly moderated the board independence‐ and human capital‐duality relationships (but not the board‐ownership‐duality relationship) as predicted.

Meta‐Analytic Research in Management: Contemporary Approaches, Unresolved Controversies, and Rising Standards

“…Carnes et al () use MASEM to test their theorizing about key mediators while Sihag and Rijsdijk () and Karam et al () harness MASEM in different ways to show how different theoretical relationships compare when viewed together. Three studies (i.e., Maas et al, ; Rosenbusch et al, ; Wang et al, ) leverage external sources (e.g., World Bank) in MARA to investigate how country‐level factors shape important relationships, thereby testing hypotheses that might otherwise be cost prohibitive. Finally, Schommer et al () use MARA to show how important relationships changed over 60 years of researchers’ investigations.…”

“…Habersang et al (2019) leverage QMA to introduce a new theoretical typology that would have been difficult to identify using deductive methods, quantitative analysis, or single case studies. Carnes et al (2019) use MASEM to test their theorizing about key mediators while Sihag and Rijsdijk (2019) and Karam et al (2019) Maas et al, 2019;Rosenbusch et al, 2019;Wang et al, 2019) leverage external sources (e.g., World Bank) in MARA to investigate how country-level factors shape important relationships, thereby testing hypotheses that might otherwise be cost prohibitive. Finally, Schommer et al (2019) use MARA to show how important relationships changed over 60 years of researchers' investigations.…”

“…Wang et al () provide a typical example. They draw on governance substitution theory to investigate antecedents to CEO duality (i.e., CEO is also the Board Chair).…”

“…By gathering studies from around the world and investigating how effect sizes vary according to country-level factors, these studies contribute to their respective literatures by testing theory-driven hypotheses that would otherwise require gathering cost-prohibitive data across many different countries. Wang et al (2019) provide a typical example. They draw on governance substitution theory to investigate antecedents to CEO duality (i.e., CEO is also the Board Chair).…”

The Effects of Market Competition, Capital Structure, and CEO Duality on Firm Performance: A Mediation Analysis by Incorporating the GMM Model Technique

“…CEO duality is a phenomenon where the chief executive officer of a company occupies the chair of the company's board of directors, along with his/her regular management position [1]. Recognition of the effect of CEO duality on firm performance has attracted much attention from research scholars [2,3]. Previous research investigating the impact of CEO duality on enhanced firm performance provided mixed results.…”