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CEO duality and compensation in the market for corporate control

Nina T. Dorata (St John's University, The Peter J. Tobin College of Business, Queens, New York, USA)
Steven T. Petra (Hofstra University, Frank G. Zarb School of Business, Hempstead, New York, USA)

Managerial Finance

ISSN: 0307-4358

Article publication date: 11 April 2008




This study seeks to examine whether CEO duality further exacerbates CEOs' motivation of self‐interest to engage in mergers and acquisitions to increase their compensation.


Regression tests using CEO compensation as the dependent variable, and CEO duality, firm size and firm performance as independent test and control variables. The regression tests are used for various sub‐samples of the firms, those that merge and those that have CEO duality.


The results indicate that for merging firms CEO compensation is positively associated with firm size. However, this association is unaffected by CEO duality. For non‐merging firms, the results indicate that CEO compensation is positively associated with firm size and firm performance. CEO duality moderates the positive association between CEO compensation and firm performance.

Research limitations/implications

This study is limited to the extent that it does not observe the deliberations of compensation committees in their setting of CEO compensation, but only examines the outcomes of those deliberations. A future area of research is to examine compensation schemes of merger/acquisition CEOs in the context of other government structures, such as board independence and composition.

Practical implications

Shareholders who desire to keep CEO compensation levels positively associated with firm performance may consider supporting the separation of the positions of CEO and Chairperson of the Board.


This study contributes to the literature by concluding that governance structure influences CEO compensation schemes and CEOs of merging firms command higher compensation in spite of governance structure and firm performance.



Dorata, N.T. and Petra, S.T. (2008), "CEO duality and compensation in the market for corporate control", Managerial Finance, Vol. 34 No. 5, pp. 342-353.



Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited

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