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Journal of Management and Governance
Published in: Journal of Management and Governance 4/2008

01-11-2008

The antecedents of simultaneous appointments to CEO and Chair

Authors: Wallace N. Davidson III, Yixi Ning, David Rakowski, Eahab Elsaid

Published in: Journal of Management and Governance | Issue 4/2008

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Abstract

In relay succession, boards add the Chair title to successful CEOs, creating duality. Sometimes boards by-pass relay succession and appoint an individual directly into the dual position. We propose that this will occur when there is the need for an unambiguous leader and when the appointee has greater bargaining power. We show that following the firing of the predecessor, when the successor is an outsider, and when the successor is not the designated heir, the incidence of simultaneous dual appointments increases. We also find that executives appointed into the dual positions are older than those appointed only as a CEO.
previous article Corporate governance and board accounts: exploring a neglected interface between boards of directors and management

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Footnotes
1
It is interesting to note that when there has been poor prior performance and the board hires an outside CEO, the stock market reacts positively (Lubatkin et al. 1989). So the market reacts positively when succession rules are followed (Shen and Canella 2003) and when the situation requires succession rules to be ignored and the board ignores them (Lubatkin et al. 1989).
 
2
This alternative perspective on duality has its roots in stewardship theory. Under stewardship theory, executives are motivated to act in the best interests of a company’s stakeholders, including stockholders.
 
3
There is considerable anecdotal evidence supporting the proposition that outsiders have increased bargaining positions. Having viewed numerous dean and department head searches, we have observed that outsiders are more successful in bargaining for increased departmental resources and lucrative contracts. The AACSB salary surveys always show that newly hired full professors make more, on average, than full professors, in general. In the sports world, we observe this as well. For example, Bill Parcels left the Patriots, a successful franchise, to join the Jets so that he could be not only head coach but also general manager.
 
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Metadata
Title
The antecedents of simultaneous appointments to CEO and Chair
Authors
Wallace N. Davidson III
Yixi Ning
David Rakowski
Eahab Elsaid
Publication date
01-11-2008
Publisher
Springer US
Published in
Journal of Management and Governance / Issue 4/2008
Print ISSN: 1385-3457
Electronic ISSN: 1572-963X
DOI
https://doi.org/10.1007/s10997-008-9066-5

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