Question #12

Reading: Reading 16 Environmental, Social, and Governance (ESG) Considerations in Investment Analysis

PDF File: Reading 16 Environmental, Social, and Governance (ESG) Considerations in Investment Analysis.pdf

Page: 4

Status: Unattempted

Correct Answer: A

Part of Context Group: Q12-13 First in Group
Shared Context
- Hernandez is analyzing the securities of a company that has mutual business interests with another company. Two firms have cross-holding share arrangements with each other. Hernandez could best describe this structure as: A) horizontal ownership. B) pyramid ownership. C) vertical ownership.
Question
Rodriguez points out to Hernandez that CEO duality is present in one of the firms that Hernandez is analyzing. It would be most accurate for Hernandez to describe CEO duality as the scenario where the chief executive officer also serves as the firm's:
Answer Choices:
A. chief operating officer
B. chairperson
C. president
Explanation
CEO duality is present when the chief executive officer also serves as chairperson of the board. CEO duality raises concerns that the oversight and monitoring role of the board may be compromised, relative to having chairperson and CEO roles independent. If the chairperson is not independent, (i.e., if these roles are combined), a company is likely to appoint a lead independent director in order to safeguard investor interests.
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