DOES CEO DUALITY IS REALLY MATTER? EVIDENCE FROM AN EMERGING MARKET

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Nirosha Hewa Wellalage ORCID logo, Stuart Locke ORCID logo

https://doi.org/10.22495/cocv8i4p7

Abstract

The relationship between board leadership, firm financial performance and agency costs is examined on behalf of a sample of multinational company subsidiaries (MNCs) and local public companies (LPCs) in Sri Lanka. Five years of data for 86 MNC subsidiaries and 113 LPCs, are collected and observations are analysed using a dynamic panel GMM estimation. This study provides empirical support for stewardship theory and contingency theory when firms are multinational subsidiaries. Moreover, findings support agency theory when firms are local public companies. Finally, this study indicates that there is no optimal board leadership structure. Hence, when companies commence their exploration of corporate governance practices, firms need to recognize that firm characteristics and contingency perspective boost the impact of board leadership structure on corporate financial performance.

Keywords: CEO, Emerging Market, Corporate Governance, Stewardship Theory

How to cite this paper: Wellalage, N. H., & Locke, S. (2011). Does CEO duality is really matter? Evidence from an emerging market. Corporate Ownership & Control, 8(4), 112-122. https://doi.org/10.22495/cocv8i4p7