Deck 7: Boards of Directors

Question 1

Theory suggests that …

A)Greater board independence is always advisable.
B)Less board independence is always preferable.
C)For firms, for which the advisory role of the board is more important than the monitoring role, a less independent board may be optimal.
D)None of the above.

Answer 1

C

Question 2

Which one of the following statements is correct?

A)In a firm with duality the functions of chairman and CEO are assumed by two separate persons.
B)In a firm with duality the functions of chairman and CEO are assumed by the same person.
C)Duality consists of a person being both an executive and a shareholder of the firm.
D)None of the above.

Answer 2

B

Question 3

The empirical evidence on the effectiveness of non-executive/ outside directors is conclusive and suggests that the latter increase firm value and performance.

A)No, the existing evidence suggests that non-executives reduce firm performance and value.
B)The existing evidence suggests that non-executives increase firm value, but only if they dominate the board of directors.
C)No, the existing empirical evidence is as yet inconclusive.
D)None of the above.

Answer 3

C

Question 4

The expression 'the glass ceiling' refers to …

A)The great accountability of non-executive directors.
B)The increasing pressure put on companies by the general public to reduce greenhouse gases.
C)The difficulty that women face to move to the higher echelons in companies.
D)None of the above.