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CFA Level 2
Corporate Finance

Assessing the Effectiveness of a Board of Directors

Medium Corporate Governance Board Of Directors

In the context of corporate governance, the effectiveness of a Board of Directors is often assessed by its structure, independence, and the qualifications of its members. A company faces a significant leadership challenge when there is a divergence of interests between management and shareholders—this is commonly known as the agency problem. To mitigate this, a board typically consists of both executive and non-executive directors.

Consider the following statements regarding the composition and duties of a Board of Directors:

Hint

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