Deck 11: Responsible Ownership and Governance

Question 1

A governing system includes the processes,structures,and relationships through which decisions are made.

Answer 1

True

Question 2

In some companies up to 95% of equity is held by non-voting shareholders.

Answer 2

True

Question 3

Credit Union Central of New Brunswick provides financial services to its customers,who are owner-members.This credit union is a cooperative form of ownership.

Answer 3

True

Question 4

Active shareholders have limited influence regarding corporate social responsibility issues.

Question 5

Non-public corporations do not have to disclose top management compensation and are not subject to the Sarbanes-Oxley legislation.

Question 6

There are many influential stakeholders in a corporation,but corporations ultimately exist to serve the shareholders.

Question 7

Canadian federal,provincial,and municipal governments all operate a large number of business enterprises,usually referred to as Crown Centers.

Question 8

Ahmed has decided that he wants to have more direct influence over a particular company's social responsibility endeavours.Although his funds are limited,he purchases a small number of shares in the corporation.Individual,direct ownership of a firm through share purchase is a powerful mechanism for influencing a firm's social responsibility practices.

Question 9

The Alzheimer's Society serves individuals and family members affected by this challenging disease.As a non-profit organization,however,it is not considered a business enterprise in Canada.

Question 10

Founding organizational members are sometimes given a category of share that allows for a greater weighting placed on their votes than for other shareholders.

Question 11

Private equity firms manage large pools of investment funds which come from large institutional investors rather than individual investors.

Question 12

The city of Lethbridge,Alberta,is growing rapidly.Its government must always balance the needs of the residents with the needs of the business community situated within its jurisdiction.This is an example of a municipal government.

Question 13

Dual-class stock allows an individual to simultaneously purchase shares in two different categories of business.

Question 14

Shareholders of an organization influence and are influenced by the actions of other stakeholders.

Question 15

Isaiah is new to investment.Having taken classes on social responsibility,Isaiah has decided to purchase stock in order to influence business practice.Purchasing either type of dual-class stock will allow him to exercise greater voting privileges.

Question 16

Owners of restricted shares do not have voting rights.

Question 17

Passive shareholders are typically owners of a small amount of shares holdings.

Question 18

Sajad has purchased shares in Microsoft through a mutual fund.Sajad does not have the right to vote as a shareholder.

Question 19

WestJet,a major Canadian airline,features its employees on its television advertising using the tagline: "Why do WestJeters care so much? Because we're also WestJet owners." This model of corporate ownership is referred to as worker capitalism.

Question 20

Venture capital firms are direct owners.

Question 21

One of the main focuses of the Board of Directors is the fiduciary operations of the corporation.

Question 22

Corporate governance is the processes,structures,and relationships through which the shareholders,as represented by a board of directors,oversee the activities of the corporation.

Question 23

It is not clear whether mixing profits and principles actually pays off for investors over the long term.

Question 24

The TSE is the largest stock exchange in Canada and is a self-regulatory agency.

Question 25

Lawyers who are directors of a corporation are considered independent.

Question 26

Shareholder democracy is the exercise of power by owners to ensure that they are treated fairly and enjoy equally the privileges and duties of ownership.

Question 27

The role of a board member is to monitor and evaluate the corporation's activities and performance.

Question 28

Most boards comprise 50 to 100 members who serve on various committees.

Question 29

Canadian regulators have had more impact than have those in the United States.

Question 30

According to the OECD,shareholder rights include the right to remove board members.

Question 31

An audit committee comprises members of the board of directors and oversees the internal and external accounting auditing function to ensure that financial statements accurately and appropriately represent the condition of the corporation and that regulated disclosures are made.

Question 32

Shareholder democracy is the requirement that every stockholder has equal voting rights when selecting the Board of Directors.

Question 33

The total level of investment in "responsible funds" is surprising large,compared to the total invested in the total mutual funds market.

Question 34

About 12% of Canada's top 500 corporate directors are women.

Question 35

There are dangers associated with excessive governance as it causes managers to be overly cautious,more risk adverse,and diminishes innovation.

Question 36

Canadian corporations far exceed the proportion of women directors serving on U.S.boards.

Question 37

Securities regulation shields top executives of publicly traded corporations from having to disclose their compensation.

Question 38

Corporate governance has changed,evidenced by the inclusion of stakeholders in the definition.

Question 39

Some researchers claim social investing is a myth because data of supports is sketchy.

Question 40

Responsible investing refers to the screening of investment decisions for social or ethical measures,rather than economic measures.

Question 41

Mohammad is purchasing shares on the Toronto Stock Exchange.He purchases shares that allow him voting rights within a corporation.Voting privileges in this corporation are allocated based on a formula of one vote per 100 shares.As owner of 1000 shares,he has 10 votes.Mohammad purchased __________.

A) dual-class stock
B) non-voting shares
C) restricted shares
D) All of the answers are correct.
E) None of the answers.

Question 42

The Canadian Museum of Civilization,located in Ottawa,is a Crown corporation that has developed a strong reputation for quality cultural displays.Increasingly,Crown corporations are expected to be "increasingly accountable" for their performance.There is concern from some patrons that there will be an attempt to shift managerial control from the curators.This is an example of which dimension of the "accountability dilemma" raised by Sexty?

A) Commercially oriented objectives may conflict with social objectives
B) Concerns regarding commercial criteria being employed
C) Autonomy by the corporation
D) Techniques of measurement
E) Limited accountability

Question 43

Accountability problems which exist in government-owned corporations include all of the following,except:

A) Government objectives may conflict with social objectives in the national interest.
B) Measurement through commercial criteria.
C) Degree of autonomy of the corporation.
D) Techniques for controlling commercial corporations.
E) Inappropriate social and environmental responsibilities.

Question 44

Counterarguments against the active role of professional money managers include all of the following,except:

A) Boards of directors may not adequately represent owners.
B) They face too much pressure to product results which are reflected in fund performance measures.
C) The personal power of money managers may distort decision-making.
D) Money managers have too much power.
E) They have the means and resources to coordinate actions amongst other money managers.

Question 45

Jean,in taking his company public,is offering different types of share ownership.Some shareowners will have voting privileges,others will not.This is an example of ______.

A) dual-class stock
B) non-voting shares
C) restricted shares
D) common shares
E) None of the answers.

Question 46

Directors have become overseers of CSR and ethical conduct.

Question 47

Having developed a prototype of his new lawnmower,John is attempting to acquire sufficient capital to market his product.In exchange for a majority ownership of his company,John receives two million dollars from an investment group in Brampton to provide the income to launch this endeavour.The investors group is an example of a(n) ___________.

A) mutual company
B) income trust
C) labour supported investment fund
D) venture capital company
E) private equity firm

Question 48

Some researchers argue that there is no such thing as socially responsible investment.Their arguments include all except which of the following?

A) Data used by those who argue for its existence is not highly selective.
B) Data by those who argue for the existence is not completely objective.
C) Claims as to the growth in impact returns for such investments are questionable.
D) No coherent case has been made for social responsibility causing social change.
E) Growth in such investments has only been reasonable.

Question 49

Milton is responsible for administering a very large mutual fund's investment in a technology company.He carefully scrutinizes the company's acquisitions and a recent take-over bid,however,he does not ever become involved in the day-to-day management of the company,preferring to just sit back and let the managers do their job.The mutual fund is _________ shareholder in this example.

A) a passive
B) an active
C) both passive and active
D) a majority
E) a minority

Question 50

Which of the following statements is not true regarding responsible investing?

A) Responsible investing means never investing in questionable regimes.
B) Responsible investing is shifting the way many businesses conduct their affairs.
C) There are stock indices that measure the return on socially responsible investments specifically.
D) If all the criteria for socially responsible investment had to be met, there would be few investments.
E) Society's standards change, what is ethical now may not be ethical in ten years.

Question 51

A(n) _________ includes the processes,structures,and relationships through which decisions are made.

A) corporate agenda
B) income trust
C) governing system
D) board of directors
E) structural program

Question 52

Which of the following terms describes the responsibilities toward owners?

A) Majority Rule
B) Stakeholder Superiority
C) Shareholder Democracy
D) Shareholder Diplomacy
E) Shareholder Legitimacy

Question 53

All of the following protect the rights of owners,except:

A) Governments
B) Self-regulatory agencies and organizations
C) Industry associations
D) Individual activists
E) Community activists

Question 54

In general,shareholders have which of the following rights as owners?

A) Voting power on major decisions
B) Transfer of ownership when desired
C) Entitlement to dividends
D) Accessibility to accurate and timely financial information
E) All of the above

Question 55

Ownership via ________ appeals to some investors as it allows them to participate in the stock market without having to make separate decisions about each purchase or sale of stocks.

A) mutual funds
B) private equity
C) venture capital
D) preferred shares
E) common shares

Question 56

Jane is concerned.Her company is in desperate need of a cash infusion; she is also on the verge of labour problems and needs some support.She had a lunch meeting with Robert,who represents a potential investor.The idea is that Robert's firm would acquire partial ownership of Jane's company in return for financial investment.Jane is also pleased that Robert's firm will also provide her with managerial assistance.Robert's firm is best characterized as a ______________ which is a type of _____________.

A) venture capital company; pension fund
B) venture capital company; private equity firm
C) labour supported investment fund; private equity firm
D) labour supported investment fund; pension fund
E) private equity firm; sovereign wealth fund

Question 57

When did corporate governance become an issue in the media?

A) 1940s
B) 1980s
C) 1990s
D) 2013
E) It is not an issue in the media.

Question 58

Which of the following factors is not part of corporate governance roles?

A) The monitoring of strategic directions
B) Cultural contexts
C) Internalities
D) Resources
E) Constitution

Question 59

Acts which may be considered unethical in terms of responsible investing criteria include all of the following,except:

A) Failure to promote affirmative action programs
B) Manufacturing weapons
C) Animal product testing
D) Gambling
E) Funds which are balanced investments

Question 60

In order to create employment,a large labour organization in New Brunswick has decided to invest a portion of its earnings in a mid-sized corporation in the technology sector.This form of business ownership is best characterized as a(n):

A) mutual fund
B) income trust
C) labour-supported investment fund
D) private equity
E) None of the answers.

Question 61

Describe the Ethical Growth Fund.

Question 62

Why has the dominance of majority shareholders over minority shareholder become an issue? What is being done to protect minority shareholders?

Question 63

Directors may be evaluated in terms of all of the following,except:

A) Service
B) Control
C) Strategy
D) Shareholder interests
E) Resource activity

Question 64

Many argue that all but one of the following has led to improvements in corporate governance,resulting in more profitable corporations.Which is it?

A) Higher stock prices
B) Increased profit
C) Increased total return
D) Lower volatility
E) Lower audit fees

Question 65

Which of the following is considered an independent director?

A) Family members
B) Current executives
C) Professional advisors
D) Unrelated directors
E) CEO

Question 66

Which of the following factors are not included as part of governance?

A) Transferring ownership
B) Access to relevant corporate information
C) Voting in shareholder meetings
D) Share in profits
E) Disclosure of restricted shares

Question 67

Due to improvements in good governance,Boards of Directors tend to do all of the following,except:

A) Meet more often
B) Seek more qualified directors
C) Meet with management present
D) Hire their own experts
E) Use more outside directors

Question 68

Differentiate between "direct" and "indirect" owners.

Question 69

In terms of the Board of Directors,which of the statements is incorrect?

A) They monitor and evaluate corporate performance.
B) They have the power to terminate the CEO.
C) They are not required to provide shareholders with an auditor's statement.
D) Their role includes fiduciary duties.
E) They must ensure continuity and succession in the management team.

Question 70

How has Mountain Equipment Co-op implemented ethics and integrity into their business model?

Question 71

Boards are paying more attention to CSR because of:

A) Less globalization
B) Increased trust
C) Non-profit activism
D) Civil society activity
E) Less investor interest

Question 72

Compare "do-gooder" funds to "objectionable" funds.

Question 73

Directors must ask several questions regarding the corporation's ethics management.These questions include all but one of the following.Which is not one of the key questions?

A) What is the company's strategy to manage ethics?
B) Who is responsible for ethics?
C) Can people recognize and resolve moral dilemmas?
D) What does civil society activity ask of managers?
E) Do we punish ethical integrity?

Question 74

Is there a requirement insofar as the number of independent directors is concerned when forming a Board of Directors for a Canadian corporation? Explain.

Question 75

When and under what circumstances did corporate governance become an issue with the media?