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ACCA Applied Knowledge · Financial Accounting · Duties and responsibilities of those charged with governance

Which of the following is a core principle of good corporate governance?

Transparency is a core governance principle: companies should disclose material information accurately and on time to stakeholders. Secrecy over remuneration, disregard for legal compliance and management approving its own targets all contradict accountability, fairness and responsibility, so they are not good governance principles.

  1. ATransparency, meaning timely and accurate disclosure of material information to stakeholdersCorrect
  2. BSecrecy about directors' remuneration to protect their privacy
  3. CMaximising short-term profit regardless of legal compliance
  4. DGiving management sole authority to approve its own performance targets

Explanation

Accepted principles include accountability, transparency, fairness and responsibility. Transparency requires timely, accurate disclosure of material matters, including financial performance and governance. Secrecy over pay, ignoring legal compliance and self-approved targets all conflict with good governance.

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