The effect of role duality on corporate performance in Malaysia

Abstract

The Malaysian Code on Corporate Governance (MCCG) recommends a separation between the position of CEO and Chairman to ensure a balance of power and authority, such that no individual has unfettered powers of making decision. It was hoped that the code would lead to more independent boards so as to provide the essential checks and balances over management’s performance. Thus, the current study seeks to explore the extent CEO duality influence corporate performance in Malaysia. The findings indicate that companies with CEOs role duality seemed not to perform as well as their counterparts with separate board leadership based on accounting performance measurements, ROE and ROA. This implies that the recommendation by the MCCG to have the two roles separated is deemed very important and must be implemented fully.