Meta-analysis on board independence and CEO duality

Mike W. Peng, Canan Mutlu and Marc van Essen

Chapter 7 in Research Handbook on Corporate Governance in China, 2025, pp 156-173 from Edward Elgar Publishing

Abstract: Earlier papers in China have generally failed to support standard agency theory-based hypotheses advocating board independence and discouraging CEO duality. However, Chinese practitioners and policymakers have initiated major corporate governance reforms along these two dimensions, thus provoking raging debates regarding their impact on firm performance. Extending Mutlu, van Essen, Peng, Saleh, and Duran (2018), this chapter reports a meta-analysis drawing on 84 studies. We find: (1) Board independence is indeed associated with better firm performance, and this positive relationship becomes stronger over time. (2) There is no strong support for the hypothesis that CEO duality is negatively related to firm performance. In terms of board independence, earlier meta-analysis studies in the United States and Asia have failed to find support for agency theory-based hypotheses. Therefore, viewed from a global perspective, our findings from China in support of agency theory can propel the wider movement to foster more board independence to new heights.

Keywords: Agency theory; Board independence; CEO duality; China; Internal corporate governance mechanisms; Meta-analysis (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035312603
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