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CEO Duality and Firm Performance during China's Institutional Transitions

Published online by Cambridge University Press:  02 February 2015

Mike W. Peng ,
Shujun Zhang  and
Xinchun Li
Mike W. Peng
Affiliation:
University of Texas at Dallas, USA
Shujun Zhang
Affiliation:
Sun Yat-sen University, China
Xinchun Li
Affiliation:
Sun Yat-sen University, China
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Abstract

Does CEO duality – the practice of one person serving both as a firm's CEO and board chair – contribute to or inhibit firm performance? Agency theory suggests that CEO duality is bad for performance because it compromises the monitoring and control of the CEO. Stewardship theory, in contrast, argues that CEO duality may be good for performance due to the unity of command it presents. The empirical evidence, largely from developed economies, is largely inconclusive. This article joins the debate by extending empirical work to the largely unexplored context of institutional transitions. Our findings, based on an archival database covering 403 publicly listed firms and 1,202 company-years in China, offer stronger support for stewardship theory and relatively little support for agency theory. Finally, we also call for a contingency perspective to specify the nature of conditions such as resource scarcity and environmental dynamism under which CEO duality may be especially valuable.

Keywords

CEO dualityChinafirm performanceinstitutional transitions两职合一企业绩效制度转型中国
Type
Articles
Information
Management and Organization Review , Volume 3 , Issue 2 , July 2007 , pp. 205 - 225
Copyright
Copyright © International Association for Chinese Management Research 2007

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