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Competition for Managers and Corporate Governance

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  • Acharya, Viral
  • Gabarro, Marc
  • Volpin, Paolo

Abstract

Why do half of S&P 500 firms have duality, that is, a CEO who is also the Chair of the Board? We show theoretically that duality can play an important role in the competition for CEOs. Empirically, we document that duality changes are concentrated at times when new CEOs are hired and firms are more likely to offer duality to CEOs with greater ability. This finding is robust to different measures of CEO ability and types of succession plans. We also show that the correlation between duality and CEO ability is stronger in industries that feature a greater competition for CEOs.

Suggested Citation

  • Acharya, Viral & Gabarro, Marc & Volpin, Paolo, 2021. "Competition for Managers and Corporate Governance," Journal of Law, Finance, and Accounting, now publishers, vol. 6(1), pages 179-219, May.
    • Handle: RePEc:now:jnllfa:108.00000053
    DOI: 10.1561/108.00000053
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    Cited by:

    1. Pierre Chaigneau & Nicolas Sahuguet, "undated". "The structure of CEO pay: pay-for-luck and stock-options," FMG Discussion Papers dp713, Financial Markets Group.
    2. Schymik, Jan, 2013. "Trade, Technologies and the Talent Organization," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79922, Verein für Socialpolitik / German Economic Association.
    3. Olarewaju Odunayo Magret & Migiro Stephen Oseko & Sibanda Mabutho, 2018. "Dividend Payout, Retention Policy and Financial Performance in Commercial Banks: Any Causal Relationship?," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 63(1), pages 37-62, April.
    4. Ullah, Saif, 2019. "Market for CEO talent, determinants and consequences," International Review of Financial Analysis, Elsevier, vol. 63(C), pages 395-405.
    5. Chaigneau, Pierre & Sahuguet, Nicolas, 2013. "The effect of monitoring on CEO pay practices in a matching equilibrium," LSE Research Online Documents on Economics 55405, London School of Economics and Political Science, LSE Library.

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    More about this item

    Keywords

    Corporate governance; competition for managers; CEO duality;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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