LEADERSHIP STRUCTURE AND FIRM PERFORMANCE BY USING CORRECT PROXIES AND ORGANIZATIONAL THEORIES

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Abstract

Leadership structure is an important determinant in affecting the value of a firm in developing and developed markets. There is a lack of consensus among the researchers on the leadership structure and the value of a firm (LSVF) relationship. Furthermore, the correct proxy to value a firm has not been used to test its relationship with the mode of leadership in these financial markets. The current study contributes to the literature related to the LSVF by using a correct proxy to value a firm and interpreting the results of the model in the light of important management theories. The tests for incremental regression and correlation are also performed. By using the data for 120 listed companies, the result for the study suggests that dual leadership structure improves the value of a firm supporting the stewardship theory in the selected markets. Finally, results related to the role of control variables suggest that lower debt, efficient regulatory authority, optimal utilization of assets and informational efficiency have a value adding impact on the value for shareholders in these markets. The results for the study provide new insights into the LSVF relationship and are of value to academics and policy makers in the selected markets.

Keywords: Corporate Governance, Board Size, Shareholders’ Value, Regulatory Authority and CEO Duality

How to cite this paper: Rashid, K., & Islam, S. M. N. (2011). Leadership structure and firm performance by using correct proxies and organizational theories. Corporate Ownership & Control, 8(3-2), 305-313. https://doi.org/10.22495/cocv8i3c2p7