CEO Duality and Firm Performance During the 2020 Coronavirus Outbreak

Stewardship theory suggests CEO duality can provide strong leadership and facilitate the development and coordination of firm strategy.  These benefits should affect both firm risk and financial performance.  We use the 2020 coronavirus outbreak as a natural experiment to determine whether CEO duality is beneficial during crisis periods.  We find S&P 1500 firms with CEO duality exhibit smaller increases in default probability and credit default swap spreads than firms with non-duality.  We also find firms with CEO duality offer cumulative abnormal returns significantly higher than those of other firms.  CEO duality is more valuable at firms with higher information costs.  Our results indicate CEO duality was more valuable during the portion of the outbreak prior to the passage of the CARES Act.  These results are consistent with stewardship theory and indicate the concentration of power from CEO duality is beneficial during crisis periods.