CEO and Board Chair Roles : To Split or Not to Split

We document that firms that are larger, have stronger governance and more able CEOs are more likely to combine CEO and board chair roles (i.e., duality). We also document that firms that split these roles have significantly lower announcement and post-announcement returns, and lower contributions of investments to shareholder wealth. This result is more pronounced for firms that split due to investor pressure, and performance outcomes are more negative for firms with higher predicted values of duality based on our economic determinants model. Our evidence suggests that recent proposals for splitting the roles for all firms warrant more careful consideration