CEO Duality, Agency Costs, and Internal Capital Allocation Efficiency
研究发现CEO兼任董事长会降低多元化企业的内部资本配置效率，表现为将更多资本投向低增长业务，且该效应在高代理成本企业中更显著，但股权薪酬可缓解此负面影响。
Abstract This study examines the impact of CEO duality on firms’ internal capital allocation efficiency. We observe that when the CEO is also chair of the board, diversified firms make inefficient investments, as they allocate more capital to business segments with relatively low growth opportunities over segments with high growth opportunities. The adverse impact of CEO duality on investment efficiency prevails only among firms that face high agency problems, as captured by high free cash flows, staggered board structure and low board independence. Depending on the severity of the agency problem, CEO duality is associated with a decrease in industry‐adjusted investment in high‐growth segments of 1% to 2.1% over the following year, relative to that in low‐growth segments. However, CEOs’ equity‐based compensation curbs the negative effect of CEO duality on internal capital allocation efficiency. Overall, the findings of this study offer strong support for the agency theory and postulate the internal capital allocation policy as an important channel through which CEO duality lowers firm value in diversified firms.