- CFA Exams
- CFA Level I Exam
- Topic 3. Corporate Issuers
- Learning Module 2. Investors and Other Stakeholders
- Subject 2. Corporate Stakeholders and Governance
CFA Practice Question
The objectives of an effective system of corporate governance include all of the following except ______
II. ensuring that the assets of the company are used efficiently and productively.
III. ensuring complete transparency in disclosures regarding operations, performance, risk, and financial position.
IV. eliminating or mitigating conflicts of interest among stakeholders.
I. ensuring that the assets of the company are used in the best interest of investors and other stakeholders.
II. ensuring that the assets of the company are used efficiently and productively.
III. ensuring complete transparency in disclosures regarding operations, performance, risk, and financial position.
IV. eliminating or mitigating conflicts of interest among stakeholders.
A. II and IV
B. III only
C. I and III
User Contributed Comments 12
| User | Comment |
|---|---|
| danlan | Where can I find this? |
| xtrailer | Infact all of them look like objectives of an effective corporate governance. |
| wollogo | I guess the key word is "complete", complete transparency would be a competitive disadvantage to the firm. |
| CalvinZ | Yes, Complete transparency may lead to a leak in operational secrets that gives this company an advantage over other companies. |
| danrow | I think is correct because it talks about corporate governance, not the preparation of financial statements the audit of those statements. That is not related to how a company is governed. It is more related to its operations. |
| malawyer | I would like to see that Blackstone makes a complete overview of their operations / prices paid etc. and then see how the shareholders like that... |
| gaetmichel | isn't III supposed to be done by the Audit ? |
| papajeff | why do we care if stakeholders have conflicts, are not just concerned with execs and board members? |
| gill15 | We are acting on behalf of the shareholders so ridding of conflict is beneficial. I completely just made that up but it sounded alright. |
| schweitzdm | Stakeholders remain affected by our business operations. We care about them because it will affect firm's reputation. Bad reputation is not good for business. |
| lighty0770 | Why is 1 not correct? Would think that the assets should be used for "highest and best use" therefore creating value for shareholders and investors. |
| myron | @lighty0770: no, the objective is not to maximize financial value of shareholders. check the textbook definitions. |