The effects of firm aspirational performance on changes in leadership structure

Despite the popularity of CEO duality as a research topic, relatively few empirical studies have explored the antecedents of this leadership structure. Prior research has generally produced null findings concerning the role of firm performance in predicting whether firms decide to separate (or combine) the CEO and board chair roles. We consider CEO ownership to be an important boundary condition that will help explain why the direct effects of these relationships lack significant results. Using a sample of S&P 1500 firms over a ten year span that begins with the 2008 financial crisis—a period in which CEO duality has experienced renewed scrutiny—we find that there is no direct effect between a firm’s performance and the likelihood that the board will separate (or combine) the CEO and board chair roles. However, we find that CEO ownership is a significant moderating factor when observing how poor (good) performance can affect the likelihood of separating (combining) these roles.