Corporate Governance MCQ Questions and Answers for Practice

1. What is the primary goal of corporate governance?

1. To maximize shareholder value
2. To ensure managerial freedom
3. To reduce taxes
4. To promote market competition

2. Which of the following is a key feature of good corporate governance?

1. Accountability
2. Risk-taking behavior
3. Large profit margins
4. Informal decision-making

3. Which of the following is an example of a corporate governance mechanism?

1. Board of Directors
2. Regulatory Authorities
3. Shareholder meetings
4. All of the above

4. The principle of “independence” in corporate governance primarily refers to:

1. Separation of ownership and control
2. Lack of personal connections among board members
3. Transparent financial reporting
4. Aligning executive compensation with performance

5. In a company, the role of the board of directors is to:

1. Make operational decisions
2. Oversee management and strategic direction
3. Handle day-to-day operations
4. Perform internal audits

6. Who is typically responsible for corporate governance in a company?

1. Shareholders
2. Board of Directors
3. CEO
4. Government

7. What does the term "stakeholder" refer to in corporate governance?

1. Only the shareholders
2. Only the board members
3. Any individual or group that has an interest in the company
4. Only the employees

8. Which of the following is a major characteristic of a well-governed company?

1. Strong internal controls
2. High leverage
3. Frequent changes in management
4. High dividend payout

9. What is the purpose of the audit committee within a company's corporate governance structure?

1. To ensure financial compliance
2. To manage day-to-day operations
3. To approve executive compensation
4. To oversee marketing strategies

10. Which act governs corporate governance in India, especially regarding financial disclosures?

1. The Companies Act, 1956
2. The Companies Act, 2013
3. The SEBI Act, 1992
4. The Indian Penal Code, 1860

11. What is a “corporate governance code”?

1. A set of voluntary guidelines
2. Mandatory laws for companies
3. A set of ethical guidelines
4. An internal document of companies

12. Which of the following is a key principle of corporate governance?

1. Transparency
2. Monopoly pricing
3. Complete regulatory control
4. Maximizing profits

13. The concept of "whistleblower protection" in corporate governance aims to:

1. Prevent fraud and corruption
2. Ensure board independence
3. Safeguard shareholders' interests
4. Ensure transparency in operations

14. Who is primarily responsible for implementing corporate governance in an organization?

1. Shareholders
2. Board of Directors
3. Chief Financial Officer
4. Regulators

15. Which of the following is a key characteristic of an effective Board of Directors?

1. High level of independence
2. Limited experience in industry
3. Family control
4. Unanimous decisions in all matters