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CEO duality leadership and corporate diversification behavior

  • Kim, Kong-Hee
  • Al-Shammari, Hussam A.
  • Kim, Bongjin
  • Lee, Seung-Hyun
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    This study examines an important, yet understudied relationship between CEO duality and corporate diversification. Results based on the data collected from Fortune 1000 U.S companies indicate that CEO duality is positively associated with corporate diversification into unrelated industries. Further analyses reveal that this relationship is moderated by a number of corporate governance mechanisms. We find that board equity ownership and institutional ownership concentration weaken the initially positive relationship between CEO duality and unrelated diversification while CEO tenure and board independence strengthen this relationship.

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    File URL: http://www.sciencedirect.com/science/article/B6V7S-4V1D7PJ-1/2/e857e4cb96ec7b819e5c7500d633be12
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    Article provided by Elsevier in its journal Journal of Business Research.

    Volume (Year): 62 (2009)
    Issue (Month): 11 (November)
    Pages: 1173-1180

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    Handle: RePEc:eee:jbrese:v:62:y:2009:i:11:p:1173-1180
    Contact details of provider: Web page: http://www.elsevier.com/locate/jbusres

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    3. Walters, Bruce A. & Kroll, Mark J. & Wright, Peter, 2007. "CEO tenure, boards of directors, and acquisition performance," Journal of Business Research, Elsevier, vol. 60(4), pages 331-338, April.
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    8. Jacquemin, Alexis P & Berry, Charles H, 1979. "Entropy Measure of Diversification and Corporate Growth," Journal of Industrial Economics, Wiley Blackwell, vol. 27(4), pages 359-69, June.
    9. Martin, John D. & Sayrak, Akin, 2003. "Corporate diversification and shareholder value: a survey of recent literature," Journal of Corporate Finance, Elsevier, vol. 9(1), pages 37-57, January.
    10. Denis, David J & Denis, Diane K & Sarin, Atulya, 1997. " Agency Problems, Equity Ownership, and Corporate Diversification," Journal of Finance, American Finance Association, vol. 52(1), pages 135-60, March.
    11. Jay C. Hartzell & Laura T. Starks, 2003. "Institutional Investors and Executive Compensation," Journal of Finance, American Finance Association, vol. 58(6), pages 2351-2374, December.
    12. Yakov Amihud & Baruch Lev, 1981. "Risk Reduction as a Managerial Motive for Conglomerate Mergers," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 605-617, Autumn.
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