ACCA Strategic Business Leader (SBL) Practice Exam

A major advantage of a unitary board is its potential to reduce agency costs. In a unitary board structure, the board of directors comprises both executive and non-executive directors working together, which fosters a holistic approach to governance. This integration allows for better communication and alignment between management and the board, reducing the separation of interests that can occur in dual board structures. As a result, the board is more likely to make decisions that prioritize the long-term success of the organization, reducing monitoring costs and alignment issues that contribute to agency costs.

The unitary board's structure streamlines decision-making processes, encourages greater transparency, and promotes accountability, all of which can lead to a reduction in the conflicts of interest that typically arise between shareholders (principals) and company management (agents). This close collaboration can ultimately enhance organizational efficiency and effectiveness, leading to improved performance and trust among stakeholders.