Explanation:
Hiring nonexecutive board members ensures independence of judgment. The board should treat all shareholders fairly. The board appoints managers but does not manage the company. The board should try to align the longer-term interests of shareholders with managers.
(Book 4, Module 54.2, LO 54.f)
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Question 23
Which of the following statements is correct in relation to the board of directors? The board should:
A
treat different classes of shareholders differently.
B
manage the company on a daily basis.
C
prioritize the interests of shareholders over those of managers.
D
assign a sufficient number of nonexecutive directors to tasks where there may be potential conflicts of interest.
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