Should the CEO also be chair of the board? An empirical examination of family-controlled public firms

Using the competing agency theoretic and stewardship theory perspectives, we empirically examine the relationship between CEO duality and firm performance in family-controlled public firms (FCPFs). We find that duality by itself does not influence firm performance in FCPFs. However, our results show that the relationship between duality and performance is contingent on the family's ownership stake in the firm. In nondual firms, performance is inversely related to family ownership level. Dual FCPFs do not exhibit any changes in performance dependent on family ownership levels. Our findings reveal, in short, that when family ownership is low, the separation of CEO and board chair roles is beneficial in terms of shareholder returns. Having different persons occupy the CEO and board chair positions is a useful governance control as the risk of family entrenchment increases.