IDEAS home Printed from https://ideas.repec.org/a/ids/ijbget/v9y2014i3p221-242.html
   My bibliography  Save this article

The effect of institutional investor type on the relationship between CEO duality and financial performance

Author

Listed:
  • Hayam Wahba
  • Khaled Elsayed

Abstract

Corporate governance literature presents inconclusive evidence regarding the relationship between board characteristics and financial performance. Remembering that certain types of, but not all, institutional investors exert influence on monitoring and influencing management, this study goes beyond the traditional analyses of institutional investors and focuses on the effect of two different types of institutional investors, namely, pressure-sensitive and pressure-resistant, on the relationship between board leadership structure and financial performance. While pressure-sensitive type includes those institutions that are less likely to challenge management, pressure-resistant type incorporates those institutions that have no business relationships with the firms in which they hold stocks, and therefore are better suited to impose controls on management decisions and behaviour. The findings strongly suggest that institutional ownership moderates the relationship between CEO duality and financial performance, with the relationship being positive (negative) in presence of pressure-resistant (pressure-sensitive) institutional ownership. These findings support prior studies that argue that corporate governance mechanisms, and hence board leadership structure, should be neither modelled nor isolated from other organisational variables. The results of this study can be of interest to researchers in corporate governance, policy makers and managers who aim to maximise the value of their firms and improve board effectiveness.

Suggested Citation

  • Hayam Wahba & Khaled Elsayed, 2014. "The effect of institutional investor type on the relationship between CEO duality and financial performance," International Journal of Business Governance and Ethics, Inderscience Enterprises Ltd, vol. 9(3), pages 221-242.
    • Handle: RePEc:ids:ijbget:v:9:y:2014:i:3:p:221-242
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=64735
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sohail Ahmad Javeed & Lin Lefen, 2019. "An Analysis of Corporate Social Responsibility and Firm Performance with Moderating Effects of CEO Power and Ownership Structure: A Case Study of the Manufacturing Sector of Pakistan," Sustainability, MDPI, vol. 11(1), pages 1-25, January.
    2. María Consuelo Pucheta-Martínez & Inmaculada Bel-Oms & Gustau Olcina-Sempere, 2018. "Female Institutional Directors on Boards and Firm Value," Journal of Business Ethics, Springer, vol. 152(2), pages 343-363, October.
    3. Ye Feng & Hsing Hung Chen & Jian Tang, 2018. "The Impacts of Social Responsibility and Ownership Structure on Sustainable Financial Development of China’s Energy Industry," Sustainability, MDPI, vol. 10(2), pages 1-15, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijbget:v:9:y:2014:i:3:p:221-242. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=70 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.