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The cost of CEO duality: Evidence from French leadership compensation

Author

Listed:
  • Géraldine Broye

    (EM Strasbourg - École de Management de Strasbourg = EM Strasbourg Business School - UNISTRA - Université de Strasbourg)

  • Abel François

    (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - ULCO - Université du Littoral Côte d'Opale - Université de Lille - CNRS - Centre National de la Recherche Scientifique)

  • Yves Moulin

    (CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine)

Abstract

This paper aims to provide a detailed analysis of the relationship between board leadership structures and executive compensation. According to agency theory, the combined position of CEO and Chairperson of the Board (COB) entails greater compensation for the CEO in order to reduce conflicts of interest. In the literature, combined board structure is generally considered to generate additional costs for companies. However, the choice of two separate structures implies the payment of incentive compensation for the COB in addition to that defined for the CEO. This paper investigates the financial cost of duality when compensation packages are set for both leaders. Our results suggest that although combined board structure is associated with higher incentive compensation for the CEO, the overall compensation cost to the company is no higher when the chairperson's compensation is considered.

Suggested Citation

  • Géraldine Broye & Abel François & Yves Moulin, 2017. "The cost of CEO duality: Evidence from French leadership compensation," Post-Print hal-01744545, HAL.
    • Handle: RePEc:hal:journl:hal-01744545
    DOI: 10.1016/j.emj.2017.01.007
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    Cited by:

    1. Anup Banerjee & Mattias Nordqvist & Karin Hellerstedt, 2020. "The role of the board chair—A literature review and suggestions for future research," Corporate Governance: An International Review, Wiley Blackwell, vol. 28(6), pages 372-405, November.
    2. Ibrahim M. Menshawy & Rohaida Basiruddin & Nor‐Aiza Mohd‐Zamil & Khaled Hussainey, 2023. "Strive towards investment efficiency among Egyptian companies: Do board characteristics and information asymmetry matter?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 2382-2403, July.
    3. Faten Zoghlami, 2021. "Does CEO compensation matter in boosting firm performance? Evidence from listed French firms," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(1), pages 143-155, January.
    4. Habib Jouber, 2019. "How does CEO pay slice influence corporate social responsibility? U.S.–Canadian versus Spanish–French listed firms," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(2), pages 502-517, March.
    5. Schmid, Stefan & Altfeld, Frederic & Dauth, Tobias, 2018. "Americanization as a driver of CEO pay in Europe: The moderating role of CEO power," Journal of World Business, Elsevier, vol. 53(4), pages 433-451.
    6. Kamil K. Nazliben & Luc Renneboog & Emil Uduwalage, 2024. "Corporate governance from colonial Ceylon to post-civil war Sri Lanka," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 28(1), pages 265-335, March.

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