Question 1

James Abercrombie has a thriving consulting firm specializing in training Boards of Directors in decision-making skills. Mr. Abercrombie has had striking success in reducing conflict and hostility among directors and allowing Boards to develop more cohesiveness. Mr. Abercrombie is considering expanding his consulting practice overseas. Which of the following statements is most likely to be TRUE?

Accepted Answer

A)   Mr. Abercrombie will have a large market in Japan because the culture highly values consensus decision making.
B)   Japanese firms will have little interest in Mr. Abercrombie's specialty because these skills are already practiced at a high level.
C)   German firms will not be interested in Mr. Abercrombie's services because the German system of decision making is based on authority and few conflicts emerge.
D)   Mr. Abercrombie should find significant need for his services in companies in transitional economies.

Question 2

Research suggests that Boards of Directors perform better if:

Accepted Answer

A)   the CEO is also the chairperson of the Board of Directors.
B)   the Bard includes employees as voting members.
C)   the Board is homogenous in composition.
D)   outside directors own significant equity in the organization.

Question 3

A powerful CEO would oppose the appointment of a lead director on the Board of Directors.

Accepted Answer

A) True 
 B)False

Question 4

German executives are not dedicated to the maximization of shareholder value to the degree that is the case for executives in the UK and United States largely because:

Accepted Answer

A)   the roles of CEO and chairperson of the Board of Directors are usually combined.
B)   large institutional investors control large blocks of stock.
C)   private shareholders and large institutional investors rarely have large ownership positions in firms.
D)   of the focus on stewardship-management in German firms rather than the financial performance focus of U.S. firms.

Question 5

Foreign investors are playing a relatively minor role in the governance of firms in many countries.

Accepted Answer

A) True 
 B)False

Question 6

Institutional owners are:

Accepted Answer

A)   shareholders in the large institutional firms listed on the New York Stock Exchange.
B)   banks and other lending institutions that have provided major financing to the firm.
C)   financial institutions such as mutual funds and pension funds that control large-block shareholder positions.
D)   prevented by the Sarbanes-Oxley Act from owning more than 50 percent of the stock of any one firm.

Question 7

In the United States, a firm's key stakeholder(s)  is(are)  the:

Accepted Answer

A)   government.
B)   executives.
C)   shareholders.
D)   customers.

Question 8

The New York Stock Exchange requires that the audit committee be:

Accepted Answer

A)   available to comment to external analysts.
B)   headed by outside directors.
C)   liable for any illegal actions by the top management team.
D)   made up of CPAs with auditing experience.

Question 9

What is corporate governance and how is it used to monitor and control managers' decisions?

Accepted Answer

Corporate governance is the relationship...

Question 10

Corporate governance revolves around the relationship between which two parties?

Accepted Answer

A)   Shareholders and the Board of Directors
B)   Shareholders and managers
C)   The Board of Directors and managers
D)   None of the the above

Question 11

The market for corporate control serves as a means of governance when:

Accepted Answer

A)   the firm is overpriced in the market.
B)   internal controls have failed.
C)   the corporation has greatly exceeded performance expectations.
D)   the top management team's interests and the owners' interests are aligned.

Question 12

Individual shareholders with small ownership percentages are less dependent on the Board of Directors to represent their interests than are large block shareholders.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is FALSE about corporate governance in China?

Accepted Answer

A)   The Chinese governance system may be tilting toward the Western model.
B)   With increasing frequency, the compensation of top executives of Chinese companies is closely related to prior and current financial performance of the firm.
C)   The state still uses direct and/or indirect controls to influence the strategies employed by most firms.
D)   Firms with higher state ownership tend to have lower market value and more volatility in those values over time.

Question 14

If the market for corporate control were efficient as a governance device, then only ____ would be targets for takeovers.

Accepted Answer

A)   firms with unethical top executives
B)   firms earning above-average returns
C)   poorly performing firms
D)   over-valued firms

Question 15

While the implementation of the Sarbanes-Oxley Act in 2002 has been controversial to some, most believe that it has had positive results in terms of protecting stakeholders and certain stockholder interests.

Accepted Answer

A) True 
 B)False

Question 16

Research suggests that the activism of institutional investors such as TIAA-CREF and CalPERS:

Accepted Answer

A)   increases shareholder value significantly.
B)   may not have a direct effect on firm performance.
C)   is so aggressive that Boards of Directors have become overly cautious.
D)   has weakened the effect of other governance mechanisms.

Question 17

Stock option repricing where the strike price value of the option has been lowered from its original position sometimes happens when firm performance is poor.

Accepted Answer

A) True 
 B)False

Question 18

Executive compensation is considered an external corporate governance mechanism because it determined in part by market forces.

Accepted Answer

A) True 
 B)False

Question 19

Corporate governance is the set of mechanisms used to manage the relationship among stakeholders and to determine and control the strategic direction and performance of an organization.

Accepted Answer

A) True 
 B)False

Question 20

Scandals at Enron, WorldCom, and HealthSouth illustrate the negative effects of poor ethical behavior on a firm's efforts to satisfy stakeholders.

Accepted Answer

A) True 
 B)False

Exam 10: Corporate Governance

Executive compensation is considered an external corporate governance mechanism because it determined in part by market forces.

Correct Answer
verified

Scandals at Enron, WorldCom, and HealthSouth illustrate the negative effects of poor ethical behavior on a firm's efforts to satisfy stakeholders.

Correct Answer
verified

The market for corporate control serves as a means of governance when:

Correct Answer
verified

Individual shareholders with small ownership percentages are less dependent on the Board of Directors to represent their interests than are large block shareholders.

Correct Answer
verified

Corporate governance is the set of mechanisms used to manage the relationship among stakeholders and to determine and control the strategic direction and performance of an organization.

Correct Answer
verified

Foreign investors are playing a relatively minor role in the governance of firms in many countries.

Correct Answer
verified

In the United States, a firm's key stakeholder(s) is(are) the:

Correct Answer
verified

Institutional owners are:

Correct Answer
verified

What is corporate governance and how is it used to monitor and control managers' decisions?

Correct Answer
verified
Corporate governance is the relationship...
View Answer

While the implementation of the Sarbanes-Oxley Act in 2002 has been controversial to some, most believe that it has had positive results in terms of protecting stakeholders and certain stockholder interests.

Correct Answer
verified

German executives are not dedicated to the maximization of shareholder value to the degree that is the case for executives in the UK and United States largely because:

Correct Answer
verified

Corporate governance revolves around the relationship between which two parties?

Correct Answer
verified

A powerful CEO would oppose the appointment of a lead director on the Board of Directors.

Correct Answer
verified

Correct Answer
verified

Stock option repricing where the strike price value of the option has been lowered from its original position sometimes happens when firm performance is poor.

Correct Answer
verified

Research suggests that the activism of institutional investors such as TIAA-CREF and CalPERS:

Correct Answer
verified

If the market for corporate control were efficient as a governance device, then only ____ would be targets for takeovers.

Correct Answer
verified

The New York Stock Exchange requires that the audit committee be:

Correct Answer
verified

Research suggests that Boards of Directors perform better if:

Correct Answer
verified

Which of the following is FALSE about corporate governance in China?

Correct Answer
verified

Exam 10: Corporate Governance

Executive compensation is considered an external corporate governance mechanism because it determined in part by market forces.

Correct AnswerverifiedShow Answer

Scandals at Enron, WorldCom, and HealthSouth illustrate the negative effects of poor ethical behavior on a firm's efforts to satisfy stakeholders.

Correct AnswerverifiedShow Answer

The market for corporate control serves as a means of governance when:

Correct AnswerverifiedShow Answer

Individual shareholders with small ownership percentages are less dependent on the Board of Directors to represent their interests than are large block shareholders.

Correct AnswerverifiedShow Answer

Corporate governance is the set of mechanisms used to manage the relationship among stakeholders and to determine and control the strategic direction and performance of an organization.

Correct AnswerverifiedShow Answer

Foreign investors are playing a relatively minor role in the governance of firms in many countries.

Correct AnswerverifiedShow Answer

In the United States, a firm's key stakeholder(s) is(are) the:

Correct AnswerverifiedShow Answer

Institutional owners are:

Correct AnswerverifiedShow Answer

What is corporate governance and how is it used to monitor and control managers' decisions?

Correct AnswerverifiedCorporate governance is the relationship...View AnswerShow Answer

While the implementation of the Sarbanes-Oxley Act in 2002 has been controversial to some, most believe that it has had positive results in terms of protecting stakeholders and certain stockholder interests.

Correct AnswerverifiedShow Answer

German executives are not dedicated to the maximization of shareholder value to the degree that is the case for executives in the UK and United States largely because:

Correct AnswerverifiedShow Answer

Corporate governance revolves around the relationship between which two parties?

Correct AnswerverifiedShow Answer

A powerful CEO would oppose the appointment of a lead director on the Board of Directors.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Stock option repricing where the strike price value of the option has been lowered from its original position sometimes happens when firm performance is poor.

Correct AnswerverifiedShow Answer

Research suggests that the activism of institutional investors such as TIAA-CREF and CalPERS:

Correct AnswerverifiedShow Answer

If the market for corporate control were efficient as a governance device, then only ____ would be targets for takeovers.

Correct AnswerverifiedShow Answer

The New York Stock Exchange requires that the audit committee be:

Correct AnswerverifiedShow Answer

Research suggests that Boards of Directors perform better if:

Correct AnswerverifiedShow Answer

Which of the following is FALSE about corporate governance in China?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Corporate governance is the relationship...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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