- CFA Exams
- CFA Level I Exam
- Topic 3. Corporate Issuers
- Learning Module 3. Corporate Governance: Conflicts, Mechanisms, Risks, and Benefits
- Subject 2. Corporate Governance Mechanisms
CFA Practice Question
Which of the following statements indicate a problem that an effective corporate governance system would mitigate or eliminate?
A. To maintain a certain level of continuity and skill on the board, no board member should be removed from the board under any circumstances.
B. A majority of the board is independent.
C. The board reports on their activities to shareholders once a year.
Explanation: Shareholders should be able to vote to remove a board member under certain circumstances. Besides, corporate governance best practices generally support the annual election of board members as being in the best interest of investors.
User Contributed Comments 5
User | Comment |
---|---|
bahodir | A question about answer B. Shouldn't all of the board be independent? |
addidas | No. That's not required. |
superjam | its not a problem in any case |
Cesarnew | 3/4 should be independent |
dream007 | Didn't really understand the question but I picked A because it was the odd one out of all the options...:) |