Having a Board of Directors whose outside membership is chosen by the CEO or works closely with the company itself strengthens corporate governance.

Question

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Corporate governance is the system of governing a company so that the interests of corporate owners and other stakeholders are protected.If the outside directors have been handpicked by the CEO because they are friends, because they have a business relationship with the firm, or because they supposedly "know the industry," the board of directors may fail to be tough on the CEO when he or she asks for leeway to pursue certain policies.Better separation results in stronger corporate governance.

Having a Board of Directors Whose Outside Membership Is Chosen