Question
Why is board independence an important internal governance mechanism?
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Answer
Independent directors are less likely to rubber-stamp management.
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Question
How does the board of directors help mitigate the shareholder-management principal-agent conflict?
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Answer
It oversees management, hires/fires the CEO, and approves strategy.
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Question
How does a compensation committee address the shareholder-management conflict?
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Answer
It designs executive pay to align management with shareholders.
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Question
What conflict is a risk committee primarily meant to mitigate?
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Answer
Excessive or poorly monitored enterprise-wide risk-taking.
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