It is a common refrain from corporate governance "reformers" that a company's CEO should not also serve as the firm's chairman of the board of directors. I have argued that a hard rule requiring such separation makes no sense:
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Aug 4, 2009 ... One of the most obvious areas of abuse concerns the resolute insistence by most public companies to have the CEO serve as chairman of the ...
www.professorbainbridge.com/.../should-the-ceo-also-be-the-chairman-of- the-board.html
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Sep 14, 2010 ... Marty Robins: It's common knowledge that separating the roles of CEO and Board Chairman (see Chairmen's Forum) is considered by most the ...
www.professorbainbridge.com/.../separatring-the-ceo-and-chairman-of-the- board.html
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Nov 3, 2014 ... I previously commented on the 2015 ISS Benchmark Policy Consultation re Independent Chair Shareholder Proposals and praised Randi Val ...
www.professorbainbridge.com/.../davis-polk-on-iss-policy-re-combined-ceo- and-chairman-of-the-board-and-iss-lousy-process.html
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Nov 6, 2014 ... Davis Polk on ISS Policy re Combined CEO and Chairman of the ... on the 2015 ISS Benchmark Policy Consultation re Independent Chair ... on ...
www.professorbainbridge.com/.../iss-adopts-a-new-holistic-ie-bogus- approach-to-independent-chairman-of-the-board-proposals.html
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Apr 25, 2010 ... Section 973 of the Dodd Wall Street reform bill mandates new disclosures from all firms -- Main Street as well as Wall Street -- explaining "the ...
www.professorbainbridge.com/.../remove-the-ceochairman-of-the-board- provision-of-the-dodd-bill.html
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A new study offers additional support for my position:
Many scholars have been quick to criticize the merits of CEO duality, a situation where a company's Chief Executive Officer is also the Chair of the Board, by claiming that CEO duality undermines the board's ability to effectively monitor and constrain self-interested CEOs. These criticisms are often based on empirical studies that use firm outcomes — aggregate performance measures — as proxies to evaluate the merits of an incentive structure such as duality on the behavior of CEOs. In this paper, I construct a novel and more direct measure of CEO behavior by gathering information submitted by companies to the Securities and Exchange Commission. This variable measures how aggressively a CEO whose company is being sold negotiates with a prospective buyer during the pre-announcement sale process. I find that dual CEOs act in the interest of their shareholders by bargaining 16.1% more aggressively in takeover negotiations than do single role CEOs. The paper’s main finding is consistent with the view that managers, when given higher levels of responsibility, act as good stewards on behalf of the firm and its shareholders.
Ghazal, Victor A., CEO Duality and Corporate Stewardship: Evidence from Takeovers (June 9, 2015). Available at SSRN: http://ssrn.com/abstract=2616464
