Passage

Good corporate governance structures encourage companies to provide accountability and control. A fundamental reason why corporate governance has moved onto the economic and political agenda worldwide has been the rapid growth in international capital markets. Effective corporate governance enhance access to external financing by firms, leading to greater investment, higher growth and employment. Investors look to place their funds where the standards of disclosure, of timely and accurate financial reporting, and of equal treatment to all stakeholders are met.

QUESTION

CSAT

Easy

Comprehension

Prelims 2023

Which of the following statements best reflects the logical inference from the passage given above?

Select an option to attempt

Explanation

Option A is incorrect: The passage says corporate governance has become important because of global capital markets. It does not say that ensuring external financing is an agenda of all countries.

Option B is correct: The passage clearly states that good corporate governance provides:

accountability
control
timely & accurate reporting
equal treatment of stakeholders

These factors make firms more trustworthy to investors, improving their credibility. This is the strongest and most direct logical inference.

Option C is incorrect: The passage says investors prefer firms with good governance. It does not say international capital markets ensure firms maintain it.

Option D is incorrect: Nothing in the passage mentions supply chains.

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