ACCA BT · Chapter 4 · Question 1 of 11
The need for corporate governance arises mainly from which of the following?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The separation of ownership of a company from its control by management
Explanation
Corporate governance addresses the agency problem: shareholders (principals) own the company but directors (agents) control it, and the directors may act in their own interests rather than the owners'. Governance mechanisms aim to align the two. Tax, marketing and competition are not the root cause of governance requirements.
More Corporate governance and social responsibility MCQs
- Q3Which board committee is normally responsible for monitoring the integrity of the financial statements and overseeing the relationship…
- Q4Why is it generally recommended that the roles of chairman and chief executive officer be held by different individuals?
- Q5A 'comply or explain' approach to corporate governance is characteristic of which type of regime?
- Q6Which of the following would most clearly threaten the independence of a non-executive director?
- Q7Carroll's pyramid of corporate social responsibility identifies four levels. Which level forms the base of the pyramid?