CIMA BA4 · Chapter 5 · Question 5 of 10
Which of the following is a characteristic of a rules-based approach to corporate governance, as exemplified by the US Sarbanes-Oxley Act?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Governance requirements are set in law and non-compliance can attract legal penalties
Explanation
A rules-based approach makes governance requirements legally binding, so failure to comply can lead to penalties. The Sarbanes-Oxley Act in the US is the usual example. The other options describe a principles-based, comply-or-explain approach.
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