Title

It Takes Two: The Incidence and Effectiveness of Co-CEOs

Document Type

Article

Publication Date

2011

Source Publication

The Financial Review

Source ISSN

0732-8516

Abstract

This study examines the phenomenon of co-CEOs within publicly traded firms. Although shared executive leadership is not widespread, it occurs within some very prominent firms. We find that co-CEOs generally complement each other in terms of educational background or executive responsibilities. Our results show that firms most likely to appoint co-CEOs have lower leverage, a more limited firm focus, less independent board structure, fewer advising directors, lower institutional ownership and greater levels of merger activity. The governance structure of co-CEO firms suggest that co-CEOships can serve as an alternative governance mechanism, with co-CEO mutual monitoring substituting for board or external monitoring and co-CEO complementary skills substituting for board advising. An event study indicates that the market reacts positively to appointments of co-CEOs while a propensity score analysis shows that the presence of co-CEOs increases firm valuation.

Comments

Financial Review, Vol. 46 (2011): 383-410. Permalink.

This publication was previously a working paper, which can be found as: (WP 2011-01)...