Importance and Role of CEO and Board Members in Organization : Report

Added on - 22 Jul 2020

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Interactions Between CEOand Board MembersCorporate Performance, andStock Prices(Literature review)
LITERATURE REVIEWThe current state of literature will be covered in this section which will highlight aboutthe importance and role of CEO and Board members within an organization. Furthermore, long-term trends about them within organizations is mentioned and finally CEO and Board membersdecision on corporate decision and stock prices are mentioned.Importance and role of CEO and Board Members on organizations.Sánchez (2017) stated that all the official firms were started during the era of industrialrevolution. During that period all the official rights were with founders (ownership and controlover) of the firm. However, as globalization, industrialization and business expansion began itwas difficult for them to control and maintain their ownership. So after the firm growth, theinvestor were made shareholders and all the operation were performed by mangers (Lins,Servaes and Tamayo, (2017). All the managers activities were managed by Board of Directorsthat were assigned to oversee the activities of an entity. According to Chen and Ma (2017) theywere most influential governance mechanisms within the company and were required forstrategic decision-making along with shareholders.Rowley, Shipilov and Greve (2017)adds thatthough management was assigned by board, however, they had more power. This bring the roleof CEO where board has to agree with their decisions for firm development (Barton, 2017).Moreover, there was need of supervision over the managers activities after the fraud and scandalcommitted by Enron in 2001. This has increased the CEO importance within the organization.They can get engage themselves into any projects, action or their own goals, interest and risks.Along with this, they were having major authority without and take decision withoutshareholder, however CEO activities were monitored by Board of Directors where they have to1
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