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Keywords:

  • COO;
  • top management team;
  • information-processing

Abstract

Critics of the CEO/COO duo have stressed that this arrangement burdens the firm with increased costs and decreases the CEO's effectiveness. This study adopts an upper echelon perspective to argue that the presence of a COO may also create TMT-level information-processing benefits that can improve firm performance in certain conditions. Data from a sample of 153 firms in five industries highlight a strong positive relationship between the presence of a COO and two established measures of firm performance: return on assets and market-to-book ratio. The data also suggest that those relationships are contingent on the broader characteristics of the TMT. Copyright © 2009 John Wiley & Sons, Ltd.