- 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 is least likely to concern an investor evaluating a corporation's shareowner rights provisions?
A. Shareowners may nominate board members.
B. Shares held by the founding family have supernormal voting rights.
C. To ensure accuracy, company executives tabulate and verify shareowner voting.
Explanation: The ability to nominate one or more individuals to the board can prevent erosion of shareowner value. Shareowners may be able to force the board or management to take steps to address shareowner concerns.
User Contributed Comments 3
| User | Comment |
|---|---|
| asalonga7 | Can someone explain why the ability for shareholders to nominate their own board members is the least concerning on this list. The explanation makes it seem like its an important issue or at least something not insignificant. |
| CJPerugini | Think of it this way, would you be more or less concerned if only the government elected our President? It acts as a checks and balances. |
| Ricey | C seems like a good approach to justify shareholder's voting rights, but A is better. |