- 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
A board chair also holding the title of chief executive, from the corporate governance point of view, is ______
A. unacceptable because it is universally prohibited in all jurisdictions.
B. acceptable because the effectiveness of the chief executive would be enhanced by his or her position as the chairperson of the board.
C. unacceptable because combining the two positions may reduce the ability and willingness of independent board members to exercise their independent judgment.
Explanation: A is incorrect; there are some jurisdictions that allow the combining of the two positions.
B is incorrect; it is not the effectiveness of the chief executive that is being questioned. The main issue is whether the board's independence would be compromised.
B is incorrect; it is not the effectiveness of the chief executive that is being questioned. The main issue is whether the board's independence would be compromised.
User Contributed Comments 2
| User | Comment |
|---|---|
| poomie83 | Warren Buffet is the Chair, CEO and largest shareholder of Berkshire Hathaway. On a side note, his company just announced a 50% drop in profit - its probably worth segragating those roles Warren!! |
| sagrr | lol. youre giving warren tips now, cfa level 1 candidate? |