The Empirical Evidence on the Effectiveness of Non-Executive/ Outside Directors

question 1

Multiple Choice

The empirical evidence on the effectiveness of non-executive/ outside directors is conclusive and suggests that the latter increase firm value and performance.

• A)No, the existing evidence suggests that non-executives reduce firm performance and value.
• B)The existing evidence suggests that non-executives increase firm value, but only if they dominate the board of directors.
• C)No, the existing empirical evidence is as yet inconclusive.
• D)None of the above.

---

Definitions:

Rich Vein of Gold

A metaphor indicating a highly profitable and abundant source or opportunity.

Convertible Preferred Shareholders

Shareholders who own shares that can be converted into a fixed number of common shares, usually at the discretion of the shareholder.

Increased Profits

A situation where a company's earnings exceed its previous earnings over a certain period, indicating improved financial performance.

Rich Vein of Gold

Refers to a significant and high-quality deposit of gold ore.