CFA Level I · CFA Level I Exam · Corporate Governance: Conflicts, Mechanisms, Risks, and Benefits
In the stakeholder management infrastructure of a company, the element that most likely helps ensure that a firm's legal obligations to employees, customers and suppliers are enforced is the:
The legal infrastructure most likely ensures that obligations to employees, customers and suppliers are enforced. It consists of laws, regulations and enforcement mechanisms, such as contract and bankruptcy law, that protect stakeholder rights. Proxy voting concerns shareholders, and dividend policy is a financial choice rather than a protective framework.
- Alegal infrastructureCorrect
- Bproxy voting system
- Cdividend policy
Explanation
The legal infrastructure comprises laws and regulations, and the means of enforcing contracts and rights, that protect stakeholders such as employees, creditors and customers. A proxy voting system is a shareholder mechanism, and dividend policy is a financial decision, so neither enforces stakeholder obligations.
Did you get it right without looking?
One question tells you little. A timed set on Corporate Governance: Conflicts, Mechanisms, Risks, and Benefits shows your real accuracy, how long you take and where you lose marks.
More Corporate Governance: Conflicts, Mechanisms, Risks, and Benefits questions
- A staggered (classified) board, in which only a portion of directors is elected each year, is most likely viewed by shareholders as:
- An investment analyst reviews a company's exposure to carbon regulation, workforce safety and board independence. Which factor is best descr…
- A company's audit committee includes the chief financial officer, who is also an executive director. This arrangement most likely:
- A company's creditors are concerned that management may take on excessive risk after bonds are issued. Which element of the stakeholder mana…
- A highly leveraged firm's shareholders approve a plan to replace a low-risk project with a much riskier one offering a higher potential payo…
- An audit committee is most likely to enhance the quality of a company's financial reporting if it is composed of: