Firms’ Rationales for CEO Duality: Evidence from a Mandatory Disclosure Regulation

Firms’ Rationales for CEO Duality: Evidence from a Mandatory Disclosure Regulation

Marc Goergen, Peter Limbach, Meik Scholz-Daneshgari

Series number :

Serial Number: 
598/2019

Date posted :

March 01 2019

Last revised :

February 16 2019
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Keywords

  • CEO duality • 
  • board of directors • 
  • Corporate governance • 
  • Regulation S-K • 
  • Textual Analysis

Exploiting the 2009 amendments to Regulation S-K, we provide unique evidence on the first-time disclosure of the reasons firms state for combining (separating) the roles of CEO and chairman. The stated reasons support both agency theory and organization theory. They are more numerous and comprise more words, including more positive words, for firms with duality.

Examining the announcement returns to firms’ disclosures, we find that investors evaluate the most frequently cited reasons for CEO duality by considering the firm’s characteristics.
 

Authors

Real name: 
Peter Limbach
University of Cologne and Centre for Financial Research (CFR)
Real name: 
Meik Scholz-Daneshgari
Karlsruhe Institute of Technology