In this study, using the data of the listed firms in Shanghai & Shenzhen stock exchange and hierarchical linear models, we examined the relationship between the dynamic collective leadership and firm performance. The results showed that the firms with higher level of collective leadership outperform the ones with lower level, moderated by environmental dynamics. As power is dynamically allocated to higher efficient top managers, the firms would perform better when vertical leadership increases. This study contributed to the collective leadership theories from the dynamic perspective, providing an alternative explanation for the conflicting findings in previous studies.