One Man Two Hats: What's All the Commotion!

Abstract

We examine performance in publicly listed U.K. companies over a period that encompasses the issuance of the Cadbury Committee's Code of Best Practice, which calls for the abolition of the combined CEO/COB position. We find that companies splitting the combined CEO/COB position to conform to the Code's requirement did not exhibit any absolute or relative improvement in performance when compared to various peer-group benchmarks. We do not necessarily scoff at mandated board structures, but the evidence suggests that this particular legislature coerced the abandonment of the combined CEO/COB position and appears to be wide of the mark.

CEO Duality Structure and Firm Performance in Pakistan

“…However, our multivariate tests find no evidence that CEO duality has a significant effect on firm performance. Our evidence casts doubt on the notion that firms changing from duality to non-dual Vance (1978); Sullivan (1988); Rechner & Dalton (1989); Leng (2004); Dahya, Galguera-Garcia &Bommel (2009) andYasser (2011) where they reported that duality is not significant to firm performance.…”

Board Structure and Survival of New Economy IPO Firms

“…Finkelstein and D'Aveni (1994) postulate that the choice of leadership structure reflects the board's effort to balance entrenchment avoidance with unity of command. Empirical evidence is, however, mixed on the relation between leadership structure and firm performance (Brickley et al, 1997;Dahya, 2004;Rechner & Dalton, 1991). In spite of this inconclusive evidence, shareholder activists, institutional investors, and regulators hold the view that the CEO should not serve in the role of board chairperson.…”

Integration of Micro and Macro Studies in Governance Research: CEO Duality, Board Composition, and Financial Performance

“…Others, however, remain unconvinced (Baliga, Moyer, & Rao, 1996;Dahya et al, 2009;Dalton et al, 2008;Dey, Engel, & Liu, 2009;Faleye, 2007;Finkelstein & D'Aveni, 1994). Dahya et al (2009), for example, concluded that the abandonment of the combined CEO/ chairperson of the board position "appears to be wide of the mark" (p. 179).…”

“…Dahya et al (2009), for example, concluded that the abandonment of the combined CEO/ chairperson of the board position "appears to be wide of the mark" (p. 179). Faleye (2007), too, suggests that insistence to "separate CEO and chairman duties may be counterproductive" and "may not produce the desired results" (p. 256).…”

“…In one choice, referred to as the duality option, the positions of CEO and board chairperson are held simultaneously by one person. The other option for the board's leadership structure is to assign these roles to two individuals: There is a CEO and there is a different chairperson of the board (e.g., Boyd, 1995;Dahya, Garcia, & van Bommel, 2009;Dalton et al, 2008;DeRue et al, 2009;Dey, Engel, & Liu, 2010). Even at the onset of the formal development of agency theory, Fama andJensen (1983a, 1983b; see also Mizruchi, 1983) were uncomfortable with the dual structure and argued that it would compromise the ability of the board to independently monitor the CEO.…”