Circumstantial evidence that allowing people to call you "Sir" (assuming they are doing it in the first place!!) is bad for the group.
I have a peer in another organisation, someone I respect highly, and get along with very well both personally and (on the now rare occasions when we work together) professionally.
He recently told me that his team tends to take every suggestion he makes as a directive, instead of just a suggestion. That's pretty bad; indeed, the only thing worse could be if they also do not contradict him when they have a differing opinion.
Since I have never thought of him as the dictatorial type (in fact he is a very jolly, easy-going, friendly, guy!) I can only imagine this is because he has never actively tried to stop his team calling him "Sir", or perhaps even encouraged it subtly due to the 10+ year age gap that he has with his team.
Thankfully I will not have this problem. Maybe the opposite, since my team (even younger than his) has now actually started pulling my leg once in a while!