What can be a product of effective corporate governance?

The selection of improved legal compliance and reduced risks as a result of effective corporate governance highlights the significant role that governance plays in promoting organizational integrity and accountability. Effective corporate governance structures are designed to ensure that a company adheres to laws, regulations, and internal policies, thereby enhancing its compliance posture. This not only minimizes the likelihood of legal infractions but also mitigates potential risks associated with non-compliance, such as financial penalties and reputational damage.

When governance mechanisms are functioning well—through transparent decision-making processes, accountability structures, and adherence to ethical guidelines—organizations tend to experience a sharper focus on risk management. This holistic approach leads to a more sustainable business model, where potential legal risks are identified and addressed proactively. Additionally, improved governance fosters a culture of responsibility and ethical behavior throughout the organization, further contributing to compliance and risk reduction.

In contrast, options that suggest negative outcomes, such as increased employee turnover, operational chaos, or favoritism in promotions, are typically signs of poor corporate governance rather than products of effective governance. These issues arise when there is a lack of structured oversight, a failure to enforce policies consistently, or an absence of a clear ethical framework, all of which can undermine the operational effectiveness and morale within a company.