Critics advocate reforms to ensure that independent outside directors represent a significant majority of the total membership of the Board. But outsider-dominated Boards may emphasize the use of financial as opposed to strategic controls. The risk of reliance on financial controls is that they may encourage managers to make decisions to maximize their interests and reduce their employment risk.

Question

Quizplus · Accepted Answer

The statement is true, as outsider-dominated Boards may prioritize financial controls over strategic ones, leading to potential conflicts of interest and reduced focus on long-term company objectives.

Critics Advocate Reforms to Ensure That Independent Outside Directors Represent