Title: Understanding the relationship between governance mechanisms, firm performance and CEO power within Tunisian context

Authors: Rym Hachana; Sana Ben Cheikh

Addresses: Tunis Business School, El Mourouj 2074, Tunisia ' Higher Institute of Management of Tunis, Avenue Bouchoucha, 2000 le Bardo - Tunis, Tunisia

Abstract: This paper attempts to explain how structural power, prestige power and ownership power shaped CEO power within the Tunisian context, and how it can be determined by governance mechanisms and organisational performance. A sample of 39 Tunisian listed firms for the period 2000-2007 was adopted. The empirical methodology falls into three steps: a multidimensional proxy was established to reveal the CEO's power intensity; a Principal Component Analysis (PCA) was selected to retain the most relevant governance mechanisms; a panel data regression was applied to test empirically the association between governance, performance and CEO power. The results demonstrate that an effective board involves a less powerful CEO. Furthermore, our analysis highlights that family-owned firms, which is the nature of the most Tunisian firms, allow CEO to accumulate more power.

Keywords: CEO power; corporate governance; firm performance; governance mechanisms; Chief Executive Officer; Tunisia; structural power; prestige power; ownership power; principal component analysis; PCA.

DOI: 10.1504/IJBEM.2012.047790

International Journal of Business and Emerging Markets, 2012 Vol.4 No.3, pp.241 - 257

Received: 28 Apr 2011
Accepted: 03 Jan 2012
Published online: 15 Nov 2014 *

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