Question 1

Research suggests that even good governance has a minimal impact on firm performance.

Accepted Answer

A) True 
 B)False

Question 2

Bonus plans allocate a year-end cash award based on an executive's performance on multiple dimensions.

Accepted Answer

A) True 
 B)False

Question 3

Common board ties can influence the choice of CEO.

Accepted Answer

A) True 
 B)False

Question 4

Most institutional investors and watchdog groups prefer a large majority of independent directors on a board to avoid ________ while carrying out fundamental responsibilities.

Accepted Answer

A)  information leaks 
B)  conflicts of interest 
C)  personality conflicts 
D)  unnecessary expenses 
A)  information leaks 
B)  conflicts of interest 
C)  personality conflicts 
D)  unnecessary expenses

Question 5

Which of the following is not a true statement concerning the role of the board of directors?

Accepted Answer

A)  They represent the shareholders' interests. 
B)  They may hire and fire top management. 
C)  They establish executive compensation. 
D)  They are always independent. 
A)  They represent the shareholders' interests. 
B)  They may hire and fire top management. 
C)  They establish executive compensation. 
D)  They are always independent.

Question 6

Compare the corporate governance practices around the world.

Accepted Answer

Governance practices differ around the g

Question 7

Explain the annual bonus plan, stock options, and long-term incentive forms of executive incentives as corporate governance devices. Be sure to include all advantages and disadvantages of each incentive type.

Accepted Answer

Firms use various forms of incentive com

Question 8

When the firm is located in a very ________ competitive environment, board involvement is most effective when outside board members are drawn from strategically dissimilar firms.

Accepted Answer

A)  stable 
B)  strong 
C)  unstable 
D)  complex 
A)  stable 
B)  strong 
C)  unstable 
D)  complex

Question 9

Which of the following statements is not a problem associated with executive ownership?

Accepted Answer

A)  It increases executives' exposure to risk. 
B)  It may lead some executives to become risk seekers. 
C)  It causes executives to risk their human capital. 
D)  It causes executives to risk their reputation. 
A)  It increases executives' exposure to risk. 
B)  It may lead some executives to become risk seekers. 
C)  It causes executives to risk their human capital. 
D)  It causes executives to risk their reputation.

Question 10

Incentives tied to current stock prices increase the likelihood that executives will make necessary capital investments.

Accepted Answer

A) True 
 B)False

Question 11

Blockholders are considered powerful because they control 10 percent or more of a firm's shares.

Accepted Answer

A) True 
 B)False

Question 12

Firms that have large gaps in pay across top managerial staff suffer negative effects.

Accepted Answer

A) True 
 B)False

Question 13

When executives own stock in their own firms, they face the problem of being able to balance their risk exposure.

Accepted Answer

A) True 
 B)False

Question 14

The type of compensation that some boards think is better at truly aligning the incentives of managers with those of shareholders is a(n) ________.

Accepted Answer

A)  bonus 
B)  restricted stock grant 
C)  raise 
D)  mixed compensation portfolio 
A)  bonus 
B)  restricted stock grant 
C)  raise 
D)  mixed compensation portfolio

Question 15

The separation of the ownership of capital necessary to fund a business enterprise from the day-to-day operational management of business affairs is known as ________.

Accepted Answer

A)  stock ownership 
B)  agency problem 
C)  corporate governance 
D)  principal problem 
A)  stock ownership 
B)  agency problem 
C)  corporate governance 
D)  principal problem

Question 16

Firms run by executives with high levels of stock ownership are much less likely to pursue acquisitions and divestitures.

Accepted Answer

A) True 
 B)False

Question 17

The separation of ownership from managerial control of a firm is known as the agency problem.

Accepted Answer

A) True 
 B)False

Question 18

More firms are beginning to require that their board members also own stock.

Accepted Answer

A) True 
 B)False

Question 19

What is the Sarbanes-Oxley Act?

Accepted Answer

Some of the most far-reaching governance

Question 20

What are some basic solutions to the agency problem?

Accepted Answer

From shareholders' perspectives, the sol

Research suggests that even good governance has a minimal impact on firm performance.

Bonus plans allocate a year-end cash award based on an executive's performance on multiple dimensions.

Common board ties can influence the choice of CEO.

Most institutional investors and watchdog groups prefer a large majority of independent directors on a board to avoid ________ while carrying out fundamental responsibilities.

Which of the following is not a true statement concerning the role of the board of directors?

Compare the corporate governance practices around the world.

Explain the annual bonus plan, stock options, and long-term incentive forms of executive incentives as corporate governance devices. Be sure to include all advantages and disadvantages of each incentive type.

When the firm is located in a very ________ competitive environment, board involvement is most effective when outside board members are drawn from strategically dissimilar firms.

Which of the following statements is not a problem associated with executive ownership?

Incentives tied to current stock prices increase the likelihood that executives will make necessary capital investments.

Blockholders are considered powerful because they control 10 percent or more of a firm's shares.

Firms that have large gaps in pay across top managerial staff suffer negative effects.

When executives own stock in their own firms, they face the problem of being able to balance their risk exposure.

The type of compensation that some boards think is better at truly aligning the incentives of managers with those of shareholders is a(n) ________.

The separation of the ownership of capital necessary to fund a business enterprise from the day-to-day operational management of business affairs is known as ________.

Firms run by executives with high levels of stock ownership are much less likely to pursue acquisitions and divestitures.

The separation of ownership from managerial control of a firm is known as the agency problem.

More firms are beginning to require that their board members also own stock.

What is the Sarbanes-Oxley Act?

What are some basic solutions to the agency problem?

Introducing Strategic Management

Leading Strategically Through Effective Vision and Mission

Examining the Internal Environment: Resources

Exploring the External Environment: Macro Industry and Dynamics

Creating Business Strategies

Crafting Business Strategy of Dynamic Contexts

Developing Corporate Strategy

Looking at International Strategies

Understanding Alliances and Cooperative Strategies

Studying Merges and Acquisitions

Organizational Structure, Systems, and Processes

Considering New Ventures and Corporate Renewal

Filters

Exam 13: Corporate Governance in the Twenty-First Century

Research suggests that even good governance has a minimal impact on firm performance.

Bonus plans allocate a year-end cash award based on an executive's performance on multiple dimensions.

Common board ties can influence the choice of CEO.

Most institutional investors and watchdog groups prefer a large majority of independent directors on a board to avoid ________ while carrying out fundamental responsibilities.

Which of the following is not a true statement concerning the role of the board of directors?

Compare the corporate governance practices around the world.

Explain the annual bonus plan, stock options, and long-term incentive forms of executive incentives as corporate governance devices. Be sure to include all advantages and disadvantages of each incentive type.

When the firm is located in a very ________ competitive environment, board involvement is most effective when outside board members are drawn from strategically dissimilar firms.

Which of the following statements is not a problem associated with executive ownership?

Incentives tied to current stock prices increase the likelihood that executives will make necessary capital investments.

Blockholders are considered powerful because they control 10 percent or more of a firm's shares.

Firms that have large gaps in pay across top managerial staff suffer negative effects.

When executives own stock in their own firms, they face the problem of being able to balance their risk exposure.

The type of compensation that some boards think is better at truly aligning the incentives of managers with those of shareholders is a(n) ________.

The separation of the ownership of capital necessary to fund a business enterprise from the day-to-day operational management of business affairs is known as ________.

Firms run by executives with high levels of stock ownership are much less likely to pursue acquisitions and divestitures.

The separation of ownership from managerial control of a firm is known as the agency problem.

More firms are beginning to require that their board members also own stock.

What is the Sarbanes-Oxley Act?

What are some basic solutions to the agency problem?

Introducing Strategic Management

Leading Strategically Through Effective Vision and Mission

Examining the Internal Environment: Resources

Exploring the External Environment: Macro Industry and Dynamics

Creating Business Strategies

Crafting Business Strategy of Dynamic Contexts

Developing Corporate Strategy

Looking at International Strategies

Understanding Alliances and Cooperative Strategies

Studying Merges and Acquisitions

Organizational Structure, Systems, and Processes

Considering New Ventures and Corporate Renewal

Filters