Discussion Paper Details

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Title: Competition for Managers and Corporate Governance

Author(s): Viral V. Acharya, Marc Gabarro and Paolo Volpin

Publication Date: April 2012

Keyword(s): CEO Duality, competition for managers and corporate governance

Programme Area(s): Financial Economics

Abstract: Why do more than half of S&P 500 firms have duality, i.e., a CEO who is also the Chairman of the Board? We show that US firms use duality as a tool to compete for CEOs. Specifically, we find that duality changes are concentrated at times when new CEOs are hired and firms are more likely to choose duality when hiring a higher quality CEO. 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 quality is stronger in industries with more competition for CEOs.

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Bibliographic Reference

Acharya, V, Gabarro, M and Volpin, P. 2012. 'Competition for Managers and Corporate Governance'. London, Centre for Economic Policy Research.