Which of the following is an example of poor corporate governance?

• A. Lack of adequate control function
• B. Emphasis on short term profitability
• C. Domination by a single individual or group
• D. Misleading accounts and information

Answer: (C)

When corporate governance fails, there is a breakdown of how authority, accountability, and oversight are balanced in the organization. Domination by a single individual or group directly undermines these safeguards: it concentrates power, weakens the board’s independence and ability to challenge management, and reduces accountability. With one faction calling the shots, decisions can be self-serving, risk management and internal controls may be neglected, and stakeholders’ interests are less likely to be protected. This clear concentration of control is a classic sign that governance structures are not functioning properly.

While the other issues you see—lacking adequate control functions, focusing only on short-term profits, or presenting misleading accounts—also point to governance weaknesses, they don’t illustrate the same fundamental breakdown of governance mechanisms as the centralized power scenario.