Causes and Consequences of the CEO Also Being the Chair of the Board

We examine whether a firm's operating environment influences the likelihood that the CEO is also the chair of the board of directors. Specifically, using robust regression techniques, we find that when a firm has greater advisory needs and is more reliant on managerial initiatives for innovation, the firm is more likely to appoint its CEO as the chair. We also examine whether CEO-Chairs use their greater bargaining power from holding dual positions to benefit themselves at the expense of shareholders. We find no evidence to suggest that CEO-Chairs are more likely to extract rents compared to CEOs who are not chairs. Collectively, these findings indicate that the decision by firms to appoint their CEOs as chairs is determined by the firms' operating environment and that there is no evidence to suggest that CEO-Chairs use their power from holding dual positions to the detriment of shareholders.