- CFA Exams
- CFA Level I Exam
- Topic 4. Corporate Issuers
- Learning Module 29. Introduction to Corporate Governance and Other ESG Considerations
- Subject 7. Corporate Governance and Stakeholder Management Risks and Benefits
CFA Practice Question
Which is NOT a benefit of an effective corporate governance structure?
B. Lower executive compensations
C. Lower default risk
A. Higher credit ratings
B. Lower executive compensations
C. Lower default risk
Correct Answer: B
An effective corporate governance structure encourages "proper" remuneration policies that motivate managers to maximize shareholder value. Lower executive compensations is not always better for the company.
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