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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Conceptual Framework of Corporate Governance

A study group at Meridian Industries Ltd traces the history of governance codes. They are told that the 1992 report of a UK committee, chaired by Sir Adrian Cadbury, introduced the 'comply or explain' approach and recommended separating the roles of chairman and chief executive. Which aspect of this evolution is correctly captured?

The Cadbury Committee report of 1992 was a voluntary code on the financial aspects of governance, based on comply or explain. It recommended separating chairman and chief executive roles and influenced later codes across the world, including those in India, though it carried no statutory force.

  1. AIt was a binding statute with criminal penalties for non-adherence
  2. BIt was a voluntary code on the financial aspects of governance that influenced later codes worldwide, including in IndiaCorrect
  3. CIt dealt only with environmental reporting by companies
  4. DIt was issued by the OECD as a treaty obligation

Explanation

The Cadbury Committee report (1992) on the financial aspects of corporate governance was a voluntary code built on comply-or-explain and became a model for many countries. It was not a statute or a treaty, and it was not about environmental reporting.

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