IPA IP 2025 Question 23

B and C: separating management from execution, and independent outside directors — both strengthen the oversight of management.

Corporate governance is the framework by which shareholders and other stakeholders monitor and supervise the people who run the company. A measure strengthens it when it makes that oversight more independent or more effective.

• •B: under an executive officer system, executive officers carry out the business, and the board concentrates on management policy and on supervising the execution, so the supervisors are no longer the supervised.
• •C: outside directors who are highly independent of the management can check the executives from an outsider's viewpoint, free of ties to them.
• •A: acquiring a company through a takeover bid, buying its shares publicly from shareholders at a stated price, is an M&A method for expanding the business; it does nothing to oversee the acquirer's own management.

Answer (c)

Why not others:

• •(a) — includes A, an acquisition, and leaves out C, the most typical governance measure
• •(b) — adds A: a takeover bid is a growth strategy, not a check on management
• •(d) — C alone leaves out B, which strengthens oversight by separating supervision from execution

Key rule: Governance measures put independent checks on the executives (outside directors, separating supervision from execution, audit committees, disclosure); M&A methods such as a takeover bid are business strategy.

Corporate Activities · AI-written, may contain errors