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Exam 28: Corporate Governance and the Sarbanes-Oxley Act

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Question 21

Multiple Choice

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Alan owns 90 percent of the shares of Whitesoft,Inc.He wrongfully uses his dominance to force the company to spend money on ventures that benefit him alone.When sued by other shareholders,Alan defends by arguing that Whitesoft as a whole is liable,but he was not personally liable as he was a mere shareholder of the company.Which of the following doctrines is the court,presiding over this case,likely to adopt in order to enforce justice?

A) attractive nuisance doctrine
B) crashworthiness doctrine
C) transferred intent doctrine
D) alter ego doctrine

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Question 22

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The Sarbanes-Oxley Act officially applies only to a ________ corporation.

A) close
B) nonprofit
C) public
D) noncommercial

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Question 23

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Shareholders of a corporation generally have limited liability.

A system in which each shareholder votes the number of shares he or she owns on candidates for each of the positions open is the cumulative voting system.

Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business is called ________.

David,the CEO of Nivera Furnishings,stealthily utilizes confidential patents and processes of the company to start a similar furnishing company that grows to be Nivera's biggest rival in the market.In terms of the duty of loyalty,David's act is an example of ________.

Explain the effect of the Sarbanes-Oxley Act on corporate governance.

Which of the following is a similarity between the duty of loyalty and the duty of care?

Which of the following is true of shareholder voting agreements?

Which of the following is an example of a corporate officer?

The Sarbanes-Oxley Act requires public companies to make personal loans to their directors.

The board of directors of a corporation is elected by the shareholders of the corporation.

The ________ Act prohibits public companies from making personal loans to their directors or executive officers.

Ella owns 30 shares of a company.She attends an annual shareholders' meeting held for the purpose of electing three directors to the board.The voting system used allows Ella to multiply the number of shares she owns (30) by the number of directors to be elected (3) ,which allows her to cast 90 votes for one candidate or a combination of multiple candidates.The elected candidate won by a simple majority of votes.The voting system used is ________.

Stock dividends do not increase a shareholder's proportionate ownership interest.

A(n) ________ is a member of the board who is not an officer of the corporation.

________ are a panel of decision makers who are elected by the shareholders.

Helen works as the vice president of Gotspeed Corporation,a company that develops and sells sports shoes.Nestor,a home-based shoemaker,meets Helen privately in order to present a model for a more cost-efficient and durable shoe.Instead of taking the idea to Gotspeed's board of directors,Helen pays Nestor's asking price and purchases the Anklator model for herself.Helen leaves Gotspeed Corporation and forms her own company that manufactures and markets the Anklator shoe models.What breach of the duty of loyalty has Helen committed here?

Making a secret profit on corporate transactions is considered a breach of duty of loyalty.

A system in which a shareholder can accumulate all of his or her votes and vote them all for one candidate or split them among several candidates is known as the straight voting system.