Board leadership structure and firm performance: an examination of resource dependence role

Abstract

This study examines if the CEO duality influence the firm economic performance in Bangladesh and the moderating effects of board composition in the form of outside independent directors. While doing so, it examines the relationship between CEO duality and firm performance during the pre appointment of outside independent directors and post appointment of outside independent directors (the role of other corporate governance mechanism as moderating variable). The finding is that there is a negative (non-significant) relationship between CEO duality and firm performance before appointment of outside independent directors in the board. However, independent leadership structure and firm performance is found to be positively related following the acquisition of resource (outside independent directors in the board) supporting the 'resource dependence theory'. The findings of this study partially support the 'agency theory' and 'resource dependence theory' but do not support the stewardship theory. This study contributes to the literature on CEO duality in the context of less a developed country.