The governance model for early corporations is the chartered city; a community granted town privileges and, if also free, independence from feudal obligations to local sovereigns or lords and debt of fealty only to the reigning monarch (ie king or emperor).
In such communities the interests of its residents were represented by a council of the leading citizens, who had the responsibility for making the bylaws of the community - civil regulations governing the operation of the town. The council would select one of their own as mayor, who had responsibility both to preside over the council meetings and to oversee the day-to-day management of the community. In the former role, the mayor was president of the council.
With the development and wide-spread adoption of double entry bookkeeping, it became possible to properly track the balance of an organization's assets against the two main classes of equities (or claims) against those assets:
- debt equities or liabilities; and
- ownership equities.
Further, double entry bookkeeping complicates the ability of a corporate officer to engage in embezzlement, increasing the confidence of passive investors that their interests are being fairly represented.
About 1600 these two developments come together with the concept of a corporation under a royal charter, creating limited liability for those who merely invest in the organization. Combined with the increased confidence in fiduciary accountability accompanying double entry bookkeeping, and the governance model of the charter cities, this attracts passive investors in sufficient quantity to allow large corporate entities to arise.
The interests of the passive investors are represented by a council of directors that becomes termed the board of directors. From amongst their own number the Board appoints officers of the corporation including one responsible for presiding over the officers - the president. Over time the spatial separation between the investors and the corporate operations makes clear that the two functions must be separated into a president of the management team, and a chairman of the board.
In the 20th century the increasing complexity of corporate structures, with subsidiary corporations and holding companies spun off for additional risk management, requires a multiplicity of presidents (for each corporation) and chairmen (for each board). The terms Chief Executive Officer and Chief Operating Officer emerge at this time to distinguish the most senior of the chairmen and presidents respectively.
The truly modern corporate structure - a plethora of holding companies (ie holding the key conglomerate assets, including subsidiaries) and subsidiary operating companies (holding the key conglomerate long term liabilities) - is a product of both modern computing (enabling the vastly increased number of transactions) and modern corporate income tax legislation (creating differential tax rates by corporate type for various asset financing arrangements). In that sense, the modern structure has only occurred in the last three decades or so, since personal computers became ubiquitous in the office environment.