CEO duality or plurality and firm value and operating performance according to the firm’s life-cycle

What is it about?

This study finds that the board leadership choice is associated with governance characteristics including board independence, managerial entrenchment, and CEO abilities measured by CEO age and CEO tenure after controlling for various firm characteristics. More importantly, CEO dualities (CEO-chair of the board or CEO-nomination committee member) or CEO pluralities (i.e., CEO-chair of the board, and a chair or a member of the nomination committee) are positively related to firm value and performance in firm’s early stage, CEO duality or CEO pluralities adversely influences firm value and operating performance in firm’s late stage.

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Why is it important?

CEO power concentration is beneficial in firms’ early stage, but harmful in firm’s late stage at which firms require check-and-balance as opposed to dictatorship. The impact of external monitoring by institutional ownership on firm value and performance is more effective than those of independent board and insiders’ ownership.