A company gives investors accurate information about a major legal dispute before they vote on a merger. Which governance principle is most directly demonstrated?
Correct answer: A. Informed decision-making through timely disclosure
- A. Informed decision-making through timely disclosure
- B. Managerial secrecy to protect competitive advantage
- C. Preferential treatment of controlling shareholders
- D. Delegation of voting rights to external auditors
Explanation
Timely disclosure of a significant legal dispute enables investors to assess the merger with relevant information. Concealing such information can mislead shareholders and undermine the quality of corporate decisions.
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About Business Ethics and Corporate Governance
Business ethics applies principles such as honesty, fairness, responsibility and transparency to decisions involving employees, customers, investors, competitors and society. Corporate governance covers the board of directors, accountability, disclosure, internal controls, stakeholder interests, agency conflicts, corporate social responsibility, codes of conduct and whistleblowing.
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