ACCA Certification Practice Test 2025 – All-in-One Guide to Secure Your Chartered Success!

The separation of the roles of chief executive officer (CEO) and chairman is essential for robust corporate governance. This distinction is rooted in the principle of checks and balances within a company's leadership structure. The chairman's role is to lead the board of directors and oversee the governance of the company, ensuring that it acts in the best interests of the shareholders.

On the other hand, the CEO is responsible for the day-to-day management of the company, making operational decisions and implementing the strategy set forth by the board. When these two roles are held by the same individual, it can lead to a concentration of power that may not serve the best interests of shareholders or stakeholders. By separating these roles, companies enhance accountability, promote independent oversight of management, and help prevent any potential conflicts of interest that may arise.

This separation aligns with best practices in corporate governance, fostering transparency and trust in the management processes of the organization.