Question

There are two opposing views concerning CEO duality: the unity of demand view in favor of effective strategic decision making vs. the agency theory view in favor of separation of power. Which view do you agree with and why?

Answer 1

I support the second view agency theory because When a CEO holds two strong position like CEO as well as being Chairman of Board of directors then Power of that CEO doubles which could raise many issues like conflicts of interest, use of power for personal gains, increase corruption etc.

I think, There should be clear seperation of power so that a person would not hold too much power which could affect sustainabilty and profitability of business. This view helps to prevent incompetency, coflicts like CEO succession planning and set up a improved perception of legitimacy.

I believe that there should be equality, legitimacy, fairness and clear sense of authority. When person is given power fairly then it is right for organization and its sustainability while too much power is always bad for person as well as organization. It affects not only shareholders but stakeholders like customers, suppliers, government, environment and soceity at large.