Ceo Duality Case Study

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CEO duality means one person holding the position of Chief Executive Officer and the chairman of the board. A lot of discussion is happening around the world in academics and in industry related to CEO duality especially in the context of board independence and effectiveness. Given the board 's perceived role of overseeing the management, there is a general consensus that the two positions should be separated no one should be given unfetter power of decision. The Cadbury Committee and Hampel Committee in UK for establishing better practices in corporate governance suggested to have separation of these roles and said to establish a clear division of responsibilities, set out in writing and agreed by the board. But there is a debate going…show more content…
They say that role duality reduces the interferences from the board and the CEO gets the opportunity to shape the company to achieve the stated objective. Donaldson and Davis(1991) states that CEO duality provides a unified leadership which facilitates better understanding and knowledge. CEO duality reduces the cost and improves the accountability of the firm by having one person at both the positions(Theodorous, 1998) and answerable to the board, which leads to better performance of the…show more content…
Previous literature showed mixed evidence of the relationship between CEO duality and firm performance. Some studies support agency theory(Shleifer and Vishny, 1997; Kiel and Nicholson, 2003; and Chen et al., 2005), other provide evidence for stewardship theory(Donaldson and Davis, 1991; Kota and Tomar, 2010 and Peng et al., 2010) and some studies does not support any of the theory and they don 't find any significant relationship between CEO duality and firm performance(Daily and Dalton, 1992, Haniffa and Hudaib, 2006; and Chen,
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