Title

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

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Full-text Version

Publisher’s Version

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