CFA Practice Question

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CFA Practice Question

The objectives of an effective system of corporate governance include all of the following except ______

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.
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