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Chairman and CEO

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Chairman and CEO

The Controversy over Board Leadership Structure

Stanford Business,

5 Minuten Lesezeit
5 Take-aways
Audio & Text

Was ist drin?

Is it helpful or harmful for a CEO also to serve as his or her company’s chairman of the board?

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Editorial Rating

7

Recommendation

Does moving away from a dual CEO/board chair corporate governance structure lead to better company oversight and performance? Not always, according to David F. Larcker and Brian Tayan of Stanford University. In this succinct report, Larker and Tayan use a sampling of 187 top firms to explore the logic, logical fallacies and statistics surrounding separation of the CEO and board chair roles. They raise pertinent questions for companies considering changes to their leadership structures. getAbstract recommends this report to business leaders and corporate shareholders.

Summary

In 2005, 71% of companies listed on the S&P 500 had a dual CEO/board chair. In 2015, that number stood at just 52%. The trend of establishing an independent board chair stems from the idea that separating these two positions will lead to better oversight and company performance. But is this belief founded in fact? Overall, studies on the effect of separating the roles indicate that the change has little influence on performance. However, there is evidence which suggests that “forced separation” – often due to pressure...

About the Authors

David F. Larcker is senior faculty member of the Center for Corporate Governance at Stanford. Brian Tayan is a researcher with the Corporate Governance Research Program at Stanford.

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