2013 MBAA/NAMS presentation, "Corporate Governance and Transparency: A Research Study Investigating CEO Duality in Fortune Ranked Companies" Patricia B. Abels, University of Findlay and Joseph T. Martelli, University of Findlay

1. Corporate Governance &
Transparency
Presented By: Patricia Abels & Joseph Martelli

2. hat is CEO Duality?
▪ When a CEO also serves as the Chairman of the Board of
Directors
▪ Splitting CEO duality is gaining acceptance within large US
companies
▪ Corporate disclosure and transparency are heightened when
the role of CEO and Chairman are split
▪ Prevalent topic due to the turbulence of the American
economy
▪ 80% of large US corporations have governance policies that
permit CEO duality, while large foreign corporations in
Europe do not.

3. Legislation
▪ Sarbanes-Oxley Act (SOX) –
Ø Regulates the financial activity and corporate governance of
public corporations
Ø Securities and Exchange Commission (SEC) regulates corporate
compliance with SOX

4. Legislation
▪ Exchange Act –
Ø Amendment to the Securities Exchange Act of 1934 to forbid
a dual CEO role (Release No. 34-48745)
Ø Requires board membership of listed public companies to
be predominately composed of independent directors, not
management

5. Legislation
▪ Exchange Act –
Ø Amendment to Regulation S-K to enhance corporate
governance and disclosure policies (Release No. 34-60280)
Ø Restricts CEOs from dually serving as Chairman of the Board
unless companies can justify and disclose its reasoning

6. Theory
▪ Agency Theory
Ø Defines the relationship existing between a stockholder
(principal) and management (agent)
Ø Assumes an agent will select the best option to enhance their
own personal benefit

7. Theory
▪ Perspectives
Ø Advocates and Agency theorists believe the CEO duality
position hinders firm performance
Ø Proponents of duality believe one central authority figure
reduces confusion

8. ethodology, Analysis, and Results
▪ This study seeks to reveal the degree to which CEO duality
roles exist today in large US publicly traded corporations
▪ Analysis incorporated the top 500 revenue-generating firms
for 2008 and 2010
▪ 432 companies remained on the Fortune 500 in 2010
▪ 86 companies appointed a new CEO
▪ Supplementary analysis focuses on the 86 new CEOs

14. onclusion
§ A fiduciary duty exists with boards of directors to protect the
interests of the shareholders
§ Dual CEOs have additional company insight and insiders have
greater firm knowledge that can permit efficiency in decisions
§ Weak board independence can promote moral hazard

15. onclusion
§ Large US companies are changing governance structures
§ Splitting the duality role is becoming more widely accepted in
order to increase corporate disclosure and transparency

16. Corporate Governance &
Transparency
Thank You for Attending
Patricia Abels & Joseph Martelli