Corporate Governance & Compliance Flashcards
7 cards from real CEA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Corporate Governance & Compliance flashcards as text
Which of the following is an example of a 'tone at the top' failure in corporate governance?
Answer: Senior executives publicly dismiss ethics policies as unnecessary bureaucracy
When senior leaders undermine or dismiss ethics policies, it signals to employees that compliance is not truly valued, eroding the ethical culture from the top down.
What is the purpose of a 'conflict of interest' disclosure policy?
Answer: To identify situations where personal interests may improperly influence business decisions
Conflict of interest disclosure policies require employees and directors to reveal personal relationships or financial interests that could bias their professional decisions.
Under NYSE listing standards, which committee must be composed entirely of independent directors?
Answer: Audit Committee
NYSE listing standards require the Audit Committee to be composed entirely of independent directors to ensure unbiased financial oversight.
A compliance training program is MOST likely to change employee behavior when it:
Answer: Uses scenario-based learning tied to real workplace situations
Scenario-based training that mirrors real workplace dilemmas helps employees recognize and respond to ethical issues they are likely to encounter.
What is the significance of the 'business judgment rule' in corporate governance?
Answer: It protects directors from liability for informed, good-faith business decisions
The business judgment rule is a legal presumption that protects directors from personal liability when they make informed, disinterested decisions in good faith for the benefit of the corporation.
Which of the following scenarios would most likely constitute insider trading?
Answer: An employee buys stock after learning of an unannounced merger from a colleague
Trading on material non-public information obtained through a breach of duty, such as learning of a merger before public announcement, constitutes insider trading.
What does an effective anti-money laundering (AML) compliance program typically include as a core component?
Answer: Customer due diligence and Know Your Customer (KYC) procedures
KYC and customer due diligence procedures help financial institutions verify the identity and assess the risk profile of clients to detect and prevent money laundering.