The moderating effect of CEO duality on the relationship between geographic diversification and firm performance in the US lodging industry
International Journal of Contemporary Hospitality Management
ISSN: 0959-6119
Article publication date: 19 February 2019
Issue publication date: 30 April 2019
Abstract
Purpose
The purpose of this study is to investigate the moderating role of CEO duality on the geographic diversification–firm performance relationship in the US lodging industry.
Design/methodology/approach
To examine the individual effect of geographic diversification and the moderating effect of CEO duality, this study adopts random effects regression. Additionally, to appropriately address the endogeneity issue, this study uses random effects regression with the instrumental variable method. The sample period spans 1990-2015 and 258 firm-year observations are included.
Findings
This study finds that geographic diversification has a positive and significant effect on firm performance. Also, the result shows a positive and significant moderating role of CEO duality, which implies that the magnitude of the impact of geographic diversification on firm performance is significantly greater when CEO duality exists.
Research limitations/implications
Although it has a limitation of applying the results of this study to privately held lodging firms in other countries, US public lodging firms are encouraged to consider a corporate governance structure incorporating CEO duality to maximize the effect of geographic diversification on firm performance.
Originality/value
This study contributes to the hospitality literature by providing a unique dimension that the influence of geographic diversification is contingent on the adoption of CEO duality. And, the results of this study provide practical guidelines for the lodging firms’ implementation of geographic diversification.
Keywords
Citation
Song, H.J. and Kang, K.H. (2019), "The moderating effect of CEO duality on the relationship between geographic diversification and firm performance in the US lodging industry", International Journal of Contemporary Hospitality Management, Vol. 31 No. 3, pp. 1488-1504. https://doi.org/10.1108/IJCHM-12-2017-0848
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited