Why Do Inside Directors Often Dominate Outsiders on a Board

question 22

Multiple Choice

Why do inside directors often dominate outsiders on a board of directors?

• A) Insiders can use their position within the management hierarchy to exercise control over the company-specific information that the board receives.
• B) They can present information in a way that puts them in a favorable light.
• C) They have intimate knowledge of the company's operations, and because superior knowledge and control over information are sources of power.
• D) They may be better positioned than outsiders to influence boardroom decision making.
• E) All of these are reasons why inside directors often dominate outsiders on a board of directors.

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Definitions:

Loan Payments

Loan payments are periodic payments made by a borrower to a lender, consisting of both principal and interest, to repay a loan.

Present Value

A concept in finance that calculates the current worth of a future sum of money or stream of cash flows given a specified rate of return.

Expected Future Value

The anticipated value of an investment at a specific future date, taking into account potential growth or depreciation based on various factors such as market conditions and interest rates.

Compounded Interest

Interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.