ITPEC IP April 2018 Question 72
Which of the following is a mechanism by which interested parties, such as the shareholders or investors, supervise and monitor the management of a company conducted by the management executives and board of directors?
Explanation
Corporate governance — the mechanism by which shareholders and other stakeholders supervise and monitor how executives and the board run the company.
Corporate governance makes management accountable to the owners and stakeholders: outside directors on the board, audit functions, information disclosure and shareholder voting check that the company is managed soundly and transparently for them. The question describes exactly that direction of supervision, from interested parties toward management.
Answer (b)
Why not others:
- •(a) Compliance — obeying laws, regulations and internal rules; governance is one means of ensuring it, but compliance is not the supervision mechanism
- •(c) Risk management — identifies, assesses and treats risks to the business; it is done by management rather than to supervise it
- •(d) TOB — a takeover bid, publicly offering to buy a company's shares to gain control; a one-off acquisition method, not continuous monitoring
Key rule: Corporate governance is how owners and stakeholders oversee management; compliance is following the rules; IT governance applies the same idea to IT.
Corporate Activities · AI-written, may contain errors
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