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Chapter 3

2.9 Reasons for splitting the role

 Representation: the chairman is clearly and solely a representative of
shareholders with no conflict of interest

 Accountability: provides a clear path of accountability for the CEO and the
management team.

 Temptation: reduces the temptation to act more in self-interest rather than
purely in the interest of shareholders.

2.10 Reasons against splitting the role

 Unity: the separation of the role creates two leaders rather than the unity
provided by a single leader.

 Ability: both roles require an intricate knowledge of the company. It is far easier
to have a single leader with this ability rather than search for two such
individuals.

 Human nature: there will almost inevitably be conflict between two high-
powered executive offices.

Illustrations and further practice

Now try TYU question 1

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