CIMA BA4 · Chapter 5 · Question 1 of 10
Which of the following best defines corporate governance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The system by which companies are directed and controlled
Explanation
Corporate governance is widely defined as the system by which companies are directed and controlled. Boards of directors are responsible for governance, and shareholders appoint the directors and auditors to satisfy themselves that an appropriate structure is in place. Financial reporting and operations are parts of what is governed, not the definition.
More Corporate governance: principles and approaches MCQs
- Q3What does 'comply or explain' mean in the context of a principles-based governance code?
- Q4Which of the following is an example of an agency cost?
- Q5Which of the following is a characteristic of a rules-based approach to corporate governance, as exemplified by the US Sarbanes-Oxley Act?
- Q6Which of the following is an advantage of a principles-based approach to corporate governance compared with a rules-based approach?
- Q7An 'insider' system of corporate ownership, common in parts of continental Europe and Asia, is characterised by which of the following?