Q.1 What is the primary objective of corporate governance?
Maximize profits only
Ensure accountability and transparency
Promote monopoly
Reduce taxes
Explanation - Corporate governance ensures companies operate with transparency, accountability, and fairness to stakeholders, not just focusing on profits.
Correct answer is: Ensure accountability and transparency
Q.2 Which of the following is a key principle of corporate governance?
Secrecy
Transparency
Nepotism
Favoritism
Explanation - Transparency in operations and disclosures builds trust among stakeholders and is a cornerstone of corporate governance.
Correct answer is: Transparency
Q.3 Corporate governance mainly deals with the relationship between:
Employer and employees
Government and business
Shareholders and management
Suppliers and buyers
Explanation - Corporate governance defines how shareholders oversee management decisions to ensure the company is run responsibly.
Correct answer is: Shareholders and management
Q.4 Which international organization issued principles of corporate governance?
WTO
OECD
UNESCO
IMF
Explanation - The OECD (Organisation for Economic Co-operation and Development) has set widely accepted corporate governance principles.
Correct answer is: OECD
Q.5 What does a Board of Directors primarily ensure?
Daily wage distribution
Strategic direction and accountability
Tax collection
Employee training
Explanation - The Board of Directors oversees company strategy, governance, and ensures accountability of management.
Correct answer is: Strategic direction and accountability
Q.6 Which of the following is NOT a principle of good corporate governance?
Fairness
Transparency
Accountability
Secrecy
Explanation - Secrecy undermines trust, while fairness, transparency, and accountability are essential principles of governance.
Correct answer is: Secrecy
Q.7 Corporate governance helps in protecting the interests of:
Only employees
Only shareholders
All stakeholders
Only government
Explanation - Good governance balances the interests of shareholders, employees, customers, creditors, and society.
Correct answer is: All stakeholders
Q.8 Agency theory in corporate governance explains conflict between:
Customers and suppliers
Shareholders and management
Government and citizens
Managers and employees
Explanation - Agency theory highlights conflicts when managers act in self-interest rather than in shareholders’ interests.
Correct answer is: Shareholders and management
Q.9 Which country’s corporate collapse highlighted the importance of corporate governance reforms in the early 2000s?
Japan
India
USA
Germany
Explanation - The Enron and WorldCom scandals in the USA stressed the need for stronger governance mechanisms.
Correct answer is: USA
Q.10 Which law in India primarily governs corporate governance in companies?
Indian Penal Code
Companies Act, 2013
Contract Act, 1872
Partnership Act, 1932
Explanation - The Companies Act, 2013 lays down rules on corporate structure, responsibilities, and governance in India.
Correct answer is: Companies Act, 2013
Q.11 Corporate governance improves:
Only shareholder profits
Business reputation and trust
Only employee salaries
Government control
Explanation - Strong governance enhances a company’s credibility, attracting investors and maintaining long-term growth.
Correct answer is: Business reputation and trust
Q.12 Which body appoints independent directors in a company?
CEO
Board of Directors
Employees
Government directly
Explanation - The Board of Directors appoints independent directors to bring impartial judgment and fairness.
Correct answer is: Board of Directors
Q.13 Corporate governance failures often lead to:
Higher trust
Business scandals and collapses
Employee promotions
Lower competition
Explanation - Poor governance often results in fraud, scandals, and even bankruptcy as seen in Enron and Satyam.
Correct answer is: Business scandals and collapses
Q.14 Which of the following is a benefit of good corporate governance?
Reduces transparency
Builds investor confidence
Encourages corruption
Promotes secrecy
Explanation - Good governance reassures investors about the company’s accountability and stability.
Correct answer is: Builds investor confidence
Q.15 Independent directors in corporate governance are important because:
They always agree with management
They bring unbiased oversight
They promote secrecy
They focus only on profits
Explanation - Independent directors provide impartial decisions, ensuring fair governance and preventing misuse of power.
Correct answer is: They bring unbiased oversight
Q.16 Corporate governance aims to reduce:
Employee bonuses
Information asymmetry
Company growth
Customer satisfaction
Explanation - By promoting transparency, governance reduces information gaps between management and stakeholders.
Correct answer is: Information asymmetry
Q.17 Who are considered primary stakeholders in corporate governance?
Only government
Shareholders, employees, customers, creditors
Only employees
Only creditors
Explanation - Primary stakeholders are directly impacted by company performance and governance.
Correct answer is: Shareholders, employees, customers, creditors
Q.18 The Cadbury Report (1992) was significant for:
Corporate governance reforms
Banking regulation
Taxation rules
Labour laws
Explanation - The UK Cadbury Report laid down pioneering recommendations for improving governance structures.
Correct answer is: Corporate governance reforms
Q.19 Corporate governance provides a framework for:
Political elections
Ethical business management
Sports regulations
Cultural festivals
Explanation - It establishes rules and practices for managing businesses ethically and responsibly.
Correct answer is: Ethical business management
Q.20 Which is an example of bad corporate governance?
Transparent reporting
Hiding liabilities
Fair treatment of shareholders
Ethical decision-making
Explanation - Concealing financial liabilities misleads stakeholders and violates governance principles.
Correct answer is: Hiding liabilities
Q.21 Corporate governance focuses on balancing interests of:
Only the CEO
Only the government
Stakeholders
Only managers
Explanation - It ensures that no single group dominates, and stakeholders’ interests are balanced.
Correct answer is: Stakeholders
Q.22 Which of the following is a mechanism of corporate governance?
Financial reporting
Employee holidays
Product packaging
Sales promotion
Explanation - Financial reporting ensures accountability and transparency, a key governance mechanism.
Correct answer is: Financial reporting
Q.23 Corporate governance minimizes the risk of:
Ethical misconduct
Profit growth
Customer satisfaction
Healthy competition
Explanation - Strong governance reduces the risk of fraud, corruption, and unethical practices.
Correct answer is: Ethical misconduct
Q.24 Which of these committees is often set up under corporate governance practices?
Audit Committee
Sports Committee
Cultural Committee
Festival Committee
Explanation - An Audit Committee ensures financial transparency and accountability, central to governance.
Correct answer is: Audit Committee
Q.25 Corporate governance ensures long-term:
Speculation
Sustainability
Short-term profits
Corruption
Explanation - Governance emphasizes long-term sustainability over short-term profit maximization.
Correct answer is: Sustainability