CEO Duality and Board Independence

Abstract

The study looked into the relationship between CEO (Chief Executive Officer) duality and board independence measured in terms of the percentage of outside directors.  Results from a sample of 65 records of companies listed in the Philippine Stock Exchange showed that there is a positive relationship between CEO duality and board independence, which is contrary to expectations of the agency theory.  However, when the interaction of board independence and industry was introduced, the main effect of board independence disappeared even as the interaction effect was significant and in the positive direction.  The result suggests that the effect of board independence cannot be taken separately from industry dynamics.  In addition, the null result of the interaction effect of board independence and organizational age suggests that tradition negates the relationship between board independence and duality.