ITPEC IP April 2026 Question 75
From the viewpoint of corporate governance, which of the following is the most appropriate method of strengthening the functions of monitoring and supervising the decision-making process of the management?
Explanation
Appointing some outside directors — directors from outside the company can supervise management's decisions independently.
Corporate governance is the mechanism by which shareholders and other stakeholders make sure that managers run the company properly, and its core is a board of directors that monitors the executives. Inside directors owe their positions to the top management they are meant to supervise; outside directors have no such ties, so appointing them strengthens independent monitoring of how management makes decisions.
Answer (c)
Why not others:
- •(a) — a camera on the president's office records who enters, not how decisions are made
- •(b) — hiring a private detective to watch executives is surveillance, not a governance structure, and it does not supervise decisions
- •(d) — the internal audit department works under management, so staffing it with law graduates does not add independent supervision of management itself
Key rule: Governance is strengthened by independent oversight of management (outside directors, corporate auditors, disclosure to shareholders), not by surveillance of individuals.
Corporate Activities · AI-written, may contain errors
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