ACCA ACCA Corporate Governance 2

Question 1

Which theory of corporate governance suggests that managers (agents) may act in their own interests rather than those of shareholders (principals)?

Accepted Answer

Agency theory

Answer

Stakeholder theory

Answer

Stewardship theory

Answer

Legitimacy theory

Question 2

What is the main purpose of a nomination committee in a listed company?

Accepted Answer

To recommend new board appointments

Answer

To nominate external auditors

Answer

To determine executive remuneration

Answer

To approve shareholder resolutions

Question 3

In corporate governance, what does the term 'independence' mean when applied to a non-executive director (NED)?

Accepted Answer

The NED has no material relationships that could impair judgment

Answer

The NED works full-time for the company

Answer

The NED is not paid for their services

Answer

The NED holds shares in the company

Question 4

Which of the following is NOT typically considered a responsibility of the board of directors?

Accepted Answer

Day-to-day operational management

Answer

Setting strategic direction

Answer

Ensuring adequate internal controls

Answer

Approving major transactions

Question 5

What is 'tunneling' in the context of corporate governance?

Accepted Answer

Expropriation of company assets by controlling shareholders for personal benefit

Answer

A method of transferring funds between subsidiaries legally

Answer

A technique to reduce tax liabilities through offshore structures

Answer

A process for fast-tracking board decisions

Question 6

According to ACCA's governance principles, what is the purpose of a remuneration committee?

Accepted Answer

To set executive director pay independently of management influence

Answer

To set salaries for all company employees

Answer

To determine fees for external advisors

Answer

To approve dividend payments to shareholders