The Case for Separating the Roles of Chairman and CEO: An Analysis of Stock Market and Accounting Data

Abstract

This UK study investigates whether the stock market prefers companies to award the positions of chairman and chief executive officer to two different people instead of permitting a single individual, the ‘dual CEO', to combine them. The results suggest (a) that the market responds favourably to the separation of the two roles and unfavourably to their fusion and (b) that the accounting performance of companies which adopt a ‘dual CEO’ appears to decline subsequent to this change.