In this study, we analyze the consequences on firms’ performance of allowing the Ceo to serve as board chairperson (Ceo duality). Previous studies highlighted both pros and cons of Ceo duality: on one hand, it allows a clear focus for objectives and operations and it fosters the strategic role of the board, while on the other hand it may hamper the monitoring role of the board. Using a sample of Italian companies from the Veneto region, the study finds a positive and significant relation between Ceo duality and firm’s performance. Additional analyses show that this positive relation is not present in large firms where likely there is a stronger need of monitoring. Overall, results reported in the paper highlight the importance of corporate governance in shaping performance and call for designing the corporate structure of each company according to its specific needs.
Keywords: Governance, Firm’s Performance, Board of Director, Ceo, Ceo Duality, Monitoring, Agency Theory, Stewardship Theory
Jel Code: M10, M12, M40, G34, O16