Should Chairman and CEO be Separated? Leadership Structure and Firm Performance in Switzerland

Markus Schmid and Heinz Zimmermann

Schmalenbach Business Review (sbr), 2008, vol. 60, issue 2, 182-204

Abstract: We investigate the valuation effects of leadership structure in Switzerland where, in contrast to the u.s., a separation of the ceO and chairman functions is common. Consistent with the majority of prior research focusing on the u.s., we find no evidence of a systematic and significant difference in valuation between firms with combined and firms with separated functions. We also investigate whether the leadership structure is related to firm-level corporate governance characteristics. We find a curvilinear relation between leadership structure and managerial shareholdings that is similar to what we observe between firm value and managerial shareholdings. A possible interpretation is that the agency costs associated with a combined function are mitigated by a higher incentive alignment of the ceO/chairman through an adequate level of managerial shareholdings.

Keywords: Corporate Governance; Firm Valuation; Leadership Structure; Managerial Shareholdings (search for similar items in EconPapers)
JEL-codes: G32 G34 G38 (search for similar items in EconPapers)
Date: 2008
References: Add references at CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:sbr:abstra:v:60:y:2008:i:2:p:182-204

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