What is a likely consequence of strong director independence?

• A. Increased influence from insiders on key decisions.
• B. Reduced oversight of management.
• C. Improved financial results due solely to independence.
• D. Greater objectivity in decision-making and reduced conflicts of interest.

Answer: (D)

Strong director independence means directors are not tied to management or major shareholders and can bring an external, impartial perspective to board decisions. This setup enhances objectivity because decisions aren’t driven by personal loyalties or internal politics; directors can critically evaluate management proposals, ask tough questions, and weigh long‑term shareholder interests over short‑term gains. With independence, the risk of conflicts of interest is reduced because directors aren’t dependent on management for their positions or rewards, so they are more likely to act in a way that protects the company and its owners.

This is why the impact described is the best fit: greater objectivity in decision-making and reduced conflicts of interest. It does not imply insiders gaining more influence, nor does it inherently reduce oversight or guarantee improved financial results solely due to independence.