Which of the following, according to author, does not have an impact on effective corporate governance?
Explanation:
The central theme of the passage is on the increased role and importance of independent directors - thus making option 1 incorrect. Option 3 is incorrect because the passage states that audit firms should not be hired for other services in order to avoid conflict and enable a truly independent opinion. Option 4 is incorrect because paragraph 10 states that all related-party transactions should require the approval of the audit committee, the full board and the shareholders to ensure effective governance. Option 2 is correct because increased compensation to independent directors has no impact on effective corporate governance. Hence, the correct answer is option 2.
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