Investigating the Effect Mediation Role of Product Market Competition and Capital Structure on the Relationship between CEO Duality on Firm Performance in Listed Firms on Tehran Stock Exchange

Measuring performance in the decision-making process is one of the most important issues in the field of financial economics due to the importance of the role of the CEO. In recent decades, the importance and impact of CEO decisions on company profitability as a measure of company performance has become one of the main topics in academic research. However, due to the separation of ownership from management and creating conflicts of interest and the dual role of the CEO in this issue, performance appraisal is one of the most important financial issues of companies, so the factors that affect the company's performance are of particular importance. Filling the gap in mediating variables on the relationship between CEO duality and company performance is critical. We choose the variables of capital structure and competition in the product market as mediators to increase our understanding of the duality of the CEO at the highest levels of leadership in an organization and to identify the factors that have a significant impact on the performance of companies.The main purpose of this study is the effect of the mediating role of competition in the product market and capital structure on the relationship between the duality of the CEO and the performance of companies listed on the Tehran Stock Exchange. 

The present study is a post-event research and is applied in terms of purpose. In order to achieve the objectives of the research, five hypotheses have been developed. Multivariate linear regression model and combined data were used to test the research hypotheses. The statistical sample of the research includes 120 companies listed on the Tehran Stock Exchange, which has been selected based on the available sampling method and has been studied during the years 2013 to 2019. 

Research findings indicate that CEO duality has a negative and significant relationship with company performance. Also, the duality of the CEO has a negative and significant effect on competition in the product market. Based on the research findings, the mediating role of competition in the product market in the relationship between CEO duality and company performance is confirmed. Also, the results showed that the duality of the CEO does not have a significant effect on the capital structure. Also, capital structure does not affect the relationship between CEO duality and company performance. From an economic point of view, business unit managers do not only seek to provide shareholder resources to improve the company's performance, but they also consider the interests of shareholders only when their own interests are best served; This will lead to a conflict of interest. Based on agency and management theories, the results of this study emphasize that the duality of the CEO with the use of managerial powers and skills in the performance of the company plays a key role. 

Managers of companies are encouraged in turbulent economic conditions, growth and resources to maximize the goal of many decisions and improve company performance. When companies have the right governance structure, they are better able to compete in a market. Having a dual structure, then, enables managers to overcome decision biases and improve the decision-making process, including market-related decisions.