Corporate Governance - a critical review

Corporate Governance - a critical review
analysis

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Objectives having the CEO and Chairman roles being occupied by the same person.......1
2. Pros and Cons of CEO Duality...........................................................................................2
3. Recommendations to address the issues in the improvement the governance of the business.
................................................................................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
CEO duality is the practice of a single person who serving as both CEO and board of
chairman as well. This is the most widely discussed corporate issue with having their own pros
and cons. This topic still unsettled due to lack of supporting evidences. Present study based on
the topic corporate governance where the research discusses the issue of CEO duality which is
one of the major issue found in corporate governance. Assignment will critically discuss and
analysis the topic by presenting the pros and cons of CEO duality. In order to analyse the issues
study will be taking JP Morgan case study on CEO duality.
MAIN BODY
1. Objectives having the CEO and Chairman roles being occupied by the same person.
Corporate Governance is the combination of rules, processes or laws under which
business is operated, regulated or controlled. The major important topic includes in Corporate
governance is TMT Top Management Team & Corporate boards. CEO duality is one of the issue
in Corporate governance which is related to the corporate boards (Ashraf, Bashir and Asghar,
2017). This issue raised by the two positions served by one single person those positions are
CEO and Chairman. It has been analysed that argument in favour of CEO duality where the CEO
has given the positive impact on the company performance. On the same side, argument against
stated that CEO duality is asserting that it also has been given the negative image of the firm as
well. According to Aslam and et.al., (2018) CEO Duality is not an important for non-existent in
firms with a two tier board structure some of the example of such countries are Germany and
Netherlands. There are many researchers who has been stated the against argument on CEO
Duality. According to them it is an wrong activity for the firm performance. It is the difficult call
for board to remove CEO that are also the chairman of the firm too. In light of such issues it is
made clear that there must be have two people for the separate position within the organization.
Reason behind this separation of the Chairman is the person who take decisions regarding hiring
or firing the person on the position of CEO. So if the CEO is also the chairman it would be the
difficult call for that. Another reason to not favour in CEO Duality because if the one person
handling two positions it will difficult for him to ignore their personal interests which is not good
for the firms position. According to Barroso Casado and et.al., (2016) board will be more
productive with an independent chairman because in such situation there are less possibilities of
conflicts of interest. As per the another objection it has been analysed that, the interest of
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