- CFA Exams
- CFA Level I Exam
- Topic 3. Corporate Issuers
- Learning Module 3. Corporate Governance: Conflicts, Mechanisms, Risks, and Benefits
- Subject 3. Corporate Governance Risks and Benefits
CFA Practice Question
Which of the following best defines the concept of corporate governance?
B. Identifiable and measurable accountabilities for all stakeholders
C. Corporate values and governance structures that ensure business is conducted in an ethical, competent, fair, and professional manner
D. A system of principles, policies, and procedures used to manage and control the activities of a corporation so as to overcome conflicts of interest inherent in the corporate form
A. A system for monitoring managers' activities, rewarding performance, and disciplining misbehavior
B. Identifiable and measurable accountabilities for all stakeholders
C. Corporate values and governance structures that ensure business is conducted in an ethical, competent, fair, and professional manner
D. A system of principles, policies, and procedures used to manage and control the activities of a corporation so as to overcome conflicts of interest inherent in the corporate form
Correct Answer: D
User Contributed Comments 4
| User | Comment |
|---|---|
| danlan | It's more used to overcome conflicts among different group in a same corporate, that's why D and not A |
| Poorvi | I thought it was C! That is Corporate Ethics I guess. |
| group | D is a more complete answer since it talks about priniciples, policies and procedures used to manage and control activities of a corporation in order to overcome conflicts of interest inherent in the corporate form. |
| ascruggs92 | It is also not A because it is not just to monitor management, but to look out for shareholders best interests in general |