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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Concept of Governance in Professional Managed Company and Promoters Driven Company

Which of the following is a typical advantage of a professionally managed company compared with a promoter-driven company?

A key advantage is access to specialised managerial talent and continuity not dependent on one family or promoter. It does not eliminate agency conflicts, guarantee profits, or shield against takeovers, since dispersed ownership can actually make the company easier to acquire.

  1. AAccess to specialised managerial talent and decision-making less tied to a single familyCorrect
  2. BComplete absence of any agency conflict
  3. CGuaranteed higher profits every year
  4. DAutomatic protection from hostile takeover

Explanation

Professional management brings skilled talent and institutional continuity not dependent on one family. It does not remove agency conflicts, guarantee profits, or prevent takeovers; dispersed holding may in fact make takeovers easier.

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