The Balance of Independence and Expertise on the Board

Very Hard Corporate Governance Board Of Directors

In a recent analysis of corporate governance practices at publicly traded companies, it was observed that the effectiveness of a board of directors has a significant impact on corporate performance and the ability to safeguard shareholder interests. Consider a scenario where a company has a board composed entirely of independent directors, a practice that is often praised for promoting objective oversight. However, further discussions revealed that this composition, while beneficial in terms of independence, lacked adequate industry experience necessary to understand the company's challenges thoroughly.

Based on this, which of the following statements best captures a critical consideration regarding the governance of a board of directors, especially concerning the balance between independence and expertise?

A board composed entirely of independent directors is less likely to conform to industry norms and thus can implement innovative strategies effectively.

A balance between independent and industry-experienced directors is essential to ensure effective oversight and informed decision-making.

Independent directors inherently possess the requisite industry knowledge necessary to guide the company through sector-specific challenges.

Hint

Submitted5.4K

Correct2.7K

% Correct49%