Seminar #18 – April 21, 2021

ABSTRACT – Several firms around the world are led by multiple CEOs. This observation has spurred a literature on the strategic implications of shared leadership. Our study investigates how co-CEOs affect corporate investment under different conditions of ownership and governance. We argue that, while family firms have more parsimonious investment policies than non-family firms, the presence of multiple CEOs raises overinvestment in family firms due to a potential divergence of personal agendas. Our analysis confirms that co-CEOs are conducive of excessive investment activities in family firms. Yet, we find that the positive effect of co-CEOs on family firms’ overinvestment is lower when the firm is subject to strong board monitoring, and higher when the co-CEOs belong to different family branches. Contrary to the view that family actors represent a homogeneous group with aligned interests and preferences, our study shows that the fragmentation of leadership among multiple actors may be costly for the family business.