CEO duality and firm performance: evidence from Hong Kong

Abstract

PurposeThis paper seeks to examine the relationship between chief executive officer (CEO) duality and firm performance and the moderating effects of the family control factor on this relationship with respect to public companies in Hong Kong.Design/methodology/approachThis study employs publicly available data from financial databases and the annual reports of a sample of 128 publicly‐listed companies in Hong Kong in 2003.FindingsNeither agency theory nor stewardship theory alone can adequately explain the duality‐performance relationship. The empirical evidence suggests that the relationship between CEO duality and accounting performance is contingent on the presence of the family control factor. CEO duality is good for non‐family firms, while non‐duality is good for family‐controlled firms.Research limitations/implicationsThe study is based on publicly available financial data, and actual board processes are not observed.Practical implicationsThe design of board leadership structure is contingent on corporate ownership and control (family control or not).Originality/valueThe paper provides empirical evidence that CEO duality is not necessarily bad for public companies in Hong Kong and would be of interest to regulatory bodies, business practitioners, and academic researchers.