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Why are inside directors seen as problematic in corporate governance?

Why are inside directors seen as problematic in corporate governance?

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Answer #1

Inside directors are seen as problematic in corporate governance because they usually have some tie-up with the firm, which is a clear case of potential conflict of interest, which impair the ability of such inside directors to remain objective in their decisions about the firm. Hence, it is very much possible that such inside directors will act to protect their own personal stake than to promote what could be beneficial to the owners.

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