The double-edged sword of CEO/chairperson duality in corporatized state-owned firms : evidence from top management turnover in China
Document Type
Journal article
Source Publication
Journal of Management and Governance
Publication Date
2-1-2014
Volume
18
Issue
1
First Page
207
Last Page
244
Keywords
Board leadership structure, China, Corporate governance, Duality, Top management turnover
Abstract
This study examines how board leadership structure (CEO duality) affects the corporate governance of corporatized state-owned firms where the state shareholders use these firms to serve both profit and non-profit objectives. We propose that CEO duality will generate a positive (negative) significant impact on the firms' corporate governance when state owners tend to monitor their CEOs on the basis of profit (non-profit) considerations. We test our hypotheses by examining the relations between CEO duality and CEO turnover in Chinese listed companies that are ultimately controlled by central or local governments. We find that CEO duality is negatively related to turnover in marginal profit-making firms where turnover would be value-enhancing. This suggests that CEO duality is detrimental to these firms' corporate governance because it entrenches relatively poorly performing CEOs. Duality is also negatively related to turnover in high-profitability firms where turnover would be non-value-enhancing. This suggests that CEO duality might positively contribute to the corporate governance of these firms by reducing the occurrence of non-value enhancing turnover. Overall, our study suggests that CEO duality is a double-edged sword in corporatized state-owned firms.
DOI
10.1007/s10997-012-9225-6
Print ISSN
13853457
E-ISSN
1572963X
Publisher Statement
Copyright © Springer Science + Business Media, LLC, 2012
Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Firth, M., Wong, S. M. L., & Yang, Y. (2014). The double-edged sword of CEO/chairperson duality in corporatized state-owned firms: Evidence from top management turnover in China. Journal of Management & Governance, 18(1), 207-244. doi: 10.1007/s10997-012-9225-6