Board independence is an issue when a board of directors includes members from related or partner firms.

Question

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When a board of directors includes members from related or partner firms, it can lead to a lack of objectivity and potential conflicts of interest, which can compromise the independence of the board. This can be detrimental to the board's ability to make unbiased and effective decisions. Therefore, board independence is an issue in such a situation.

Board Independence Is an Issue When a Board of Directors