Dual office holding, corporate governance and takeover gains

Abstract

Outlines various criticisms of the corporate practice of having the same individual as chief executive officer and chairman of the board but recognizes that it may also have some benefits. Uses data from a sample of US firms bidding in takeovers from 1985‐1990 to explore the relationship between takeover gains and the existence of dual office holding, insider ownership and the proportion of independent directors. Finds that dual office holding does not reduce the bidders’ wealth, possibly because it is often associated with a high proportion of independent directors who are likely to control the dual office holder in the interests of shareholders.