The Case for Separating the Roles of Chairman and CEO: An Analysis of Stock Market and Accounting Data

Abstract

This UK study investigates whether the stock market prefers companies to award the positions of chairman and chief executive officer to two different people instead of permitting a single individual, the 'dual CEO', to combine them. The results suggest (a) that the market responds favourably to the separation of the two roles and unfavourably to their fusion and (b) that the accounting performance of companies which adopt a 'dual CEO' appears to decline subsequent to this change.

Does the South African stock market value an independent dual board leadership structure?

“…We find a significant positive link between DBLS and market valuation, but only in firms with independent chairpersons, implying that the market values firms with independent DBLS more highly. Our evidence provides support for both the recommendations of King II and the findings of previous studies (Rechner and Dalton, 1991;Dahya et al, 1996) that report a positive association between DBLS and market valuation, but inconsistent with those that either report a negative (Boyd, 1995;Kiel and Nicholson, 2003) or no (Baliga et al, 1996;Bozec, 2005) association. The findings are robust across a number of econometric models that control for different types of market valuation proxies and endogeneity problems.…”

“…Our evidence also provides support for both the recommendations of King II and the findings of previous studies (Rechner and Dalton, 1991;Dahya et al, 1996) that report a positive association between DBLS and market valuation, but inconsistent with those that either report a negative (Boyd, 1995;Kiel and Nicholson, 2003) or no (Baliga et al, 1996;Bozec, 2005) association. …”

“…They report that companies with a DBLS consistently outperformed those with CEO duality. Similarly, Dahya et al (1996) investigate whether the US stock market prefers companies to have a DBLS. Consistent with the evidence of Rechner and Dalton (1991), their results suggest that the market values firms with DBLS more highly.…”

Audit Committee, Corporate Governance and Firm Performance: Empirical Evidence from India

“…Bliss (2011) stated that CEO duality is an obstacle for the independence of the board. Researchers such as Brickley et al (1997); Dahya et al (1996) argued that a dual CEO role was important as it reduced chances of clashes on viewpoint and enabled timely decision making. Several other studies (De Oliveira Gondrige et al, 2012;Dharmadasa et al, 2014;Schmid & Zimmermann, 2008) found no correlation between dual CEO role and performance of firm.…”

The Relationship Between Corporate Social Responsibility Reporting and Corporate Governance: Evidence from Turkish Banking Sector

“…Previous studies like Dahya, Lonie, andPower (1996), Carter, Simkins, andSimpson (2003), Branco and Rodrigues (2008), and Khan (2010) showed the positive relation between CSR reporting and corporate governance. According to Fama and Jensen (1983), increasing number of non-executive members on the board is a useful tool to solve the conflicts between managers and owners.…”