Abstract
This research investigates the relationship between CEO duality and the performance of Brazilian firms in 2008. While CEO duality has been the dominant board leadership structure of US corporations, Brazilian firms typically separate the roles of CEO and chairperson. During 2008, some Brazilian firms such as Sadia S/A (a multinational food processing company) adopted a dual leadership structure in an attempt to respond to the global systemic crisis. Using agency and stewardship theory perspectives, we tested our hypotheses with data of Brazilian listed companies. The empirical results indicate that companies where the CEO and chairperson are the same person have significantly higher performance (ROE). We also found a positive association between CEO duality and all other firm performance measures (ROA, ROC, MTBV), although the results were not statistically significant for these.
Highlights
Effective governance is critical to all economic transactions, especially in emerging and transitioning economies (DHARWADKAR ET AL., 2000)
Most prior studies on corporate governance have focused on US firms (KIEL AND NICHOLSON, 2003), but an increasing body of research on the effectiveness of governance in Brazil has emerged
This paper investigates the relationship between CEO duality and the performance of Brazilian public companies in 2008
Summary
Effective governance is critical to all economic transactions, especially in emerging and transitioning economies (DHARWADKAR ET AL., 2000). Most prior studies on corporate governance have focused on US firms (KIEL AND NICHOLSON, 2003), but an increasing body of research on the effectiveness of governance in Brazil has emerged (a comprehensive review of the Brazilian literature can be found in Leal, 2004). Understanding whether board leadership features affect the performance and value of firms is an important question of interest to academics, practitioners and regulators. Board leadership mechanisms have attracted particular attention as one of the focal points of most governance systems (RHOADES ET AL., 2001). Board functioning is important for attracting foreign direct investment and managing domestic investment efficiently (JUDGE ET AL., 2003)
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