Deck 11: Corporate Governance

Question 1

The form of control that ensures that managers are fulfilling the obligations to the owners of the organization is known as:

A) Corporate governance.
B) Market for corporate control.
C) Regulation.
D) Corporate social responsibility.

Answer 1

A

Question 2

Jonathan Charkham points out, 'good governance means a proper balance between enterprise and __________________.

Answer 2

accountability

Question 3

For Brandeis (2004), the conferring of corporate status went hand in hand with the needs of public policy and welfare.

Answer 3

True

Question 4

One of the characteristics of the modern corporation is 'limited liability'. This means:

A) Shares can be transferred.
B) Separation between the corporation and its owners and employees.
C) The corporation is a legal entity.
D) The corporation has a board of directors.

Question 5

The philosophical approach that challenges the shareholder value approach to organizational purpose is called __________________ capitalism.

Question 6

Corporate governance is inextricably bound up with one's views of the _______________ of corporations.

Question 7

_________ coined the famous phrase 'the business of business is business'.

Question 8

American Business Model (ABM), often referred to as the Washington consensus, is based on four claims:

A) Self-interest
B) Planned economies
C) Market fundamentalism
D) Corporate Social Responsibility

Question 9

Sir Adrian Cadbury maintains the fact that companies such as the Body Shop demonstrates that not all shareholders are concerned with maximizing profits but also: Please select all that apply.

A) Transparency.
B) Wider objectives.
C) Short-term profit.
D) Long-term profit.

Question 10

The separation of ownership from control of a corporation is known as the _____________________ problem.

Question 11

According to R. Edward Freeman, stakeholders are individuals or groups which affect or are affected by the achievement of an organization's objectives; they may include:

A) Shareholders
B) Government
C) Competitors
D) Suppliers

Question 12

From the Japanese concept of kyosei, a corporation is:

A) Outward looking, aware of its duty to people outside its organization such as customers, suppliers, and the community.
B) A self-sufficient organism set apart from society.
C) Regulated.
D) Able to be profitable and sustainable in the long run.

Question 13

The Japanese concept of 'kyosei' is similar to the ideas in stakeholder theory.

Question 14

An approach which is specifically concerned with the ethical behaviour of organizations towards their internal and external environment is:

A) Corporate Social Responsibility
B) Corporate Governance
C) Moral Philosophy
D) Business policy

Question 15

Which of the following are the views of stakeholder theory? Please select all that apply.

A) The key objective is value maximization.
B) There are multiple objectives to try to benefit all stakeholders.
C) The key protagonist is Milton Friedman.
D) The key protagonist is R. E. Freeman.

Question 16

Presumption that corporate managers can be left to act in the best interests of shareholders is based on:

A) Professional quality
B) The belief that a poorly performing company will be the subject of takeovers
C) Management discipline
D) The threat of which is sufficient to discipline managers to act in the shareholders' interests.

Question 17

The Committee on the Financial Aspects of Corporate Governance is commonly referred to as the _______________ Committee.

Question 18

Corporate governance ensures that managers will not act in their own self-interest.

Question 19

Which of the following are recommendations of the Cadbury Committee? Please select all that apply.

A) Legislation is required to keep corporations in check
B) Non-executive directors should be selected through a formal process
C) Directors' pay should be subject to a remuneration committee
D) The chairman and the CEO should be separate roles

Question 20

The Hampel Committee (1998) was set up to review the Cadbury Report and the Greenbury Report.

Question 21

There has been some concern about the lack of diversity in the boardroom, particularly the under representation of women. Davies Walker recommended reforms to deal with this issue, including: Please select all that apply:

A) FTSE 100 companies should aim for a minimum of twenty-five per cent of women in the board room by 2015.
B) To identify gender discrimination.
C) Extensive reforms to strengthen governance.
D) To equally balance the both genders in the board room.

Question 22

Regarding the role of non-executive directors, the recommendations of the Higgs Report included:

A) Non-executive directors should meet as a group at least once a year without executive directors being present.
B) The board should inform shareholders why they believe an individual should be appointed as a non-executive director and how they meet the requirements of the role.
C) The role of non-executive directors should not have accountability to shareholders.
D) A full-time executive director should not hold more than one non-executive directorship or become chairman of a major corporation.

Question 23

The main recommendations of Sarbanes-Oxley include:

A) Chief executives now have to attest personally for the accuracy of company accounts
B) A higher standard for board members who sit on the audit committee
C) The prevention of loans to executives
D) No criminal and civil penalties for securities violations

Question 24

The Sarbanes-Oxley Act was as a result of the collapse of Polly Peck.

Question 25

The fundamental question arising from the Sarbanes-Oxley Act (2002) was whether we can or should legislate for ___________________.

Question 26

The Greenbury Report reported on investors' concerns regarding the role of non-executive directors.

Question 27

Kakabadse and Kakabadse (2002) argue that the corporate governance debate needs to be pursued more at:

A) The societal/political level
B) The shareholders' level
C) The enterprise level
D) The global level

Question 28

The proponents of the agency view of business argue that corporate governance only needs to be revised around the edges.

Question 29

Proponents of the agency approach consider the stakeholder approach to be problematic because: Please select all that apply.

A) Conflicting stakeholder needs can cause a misallocation of resources.
B) Conflicting shareholder needs can cause a misallocation of resources.
C) A focus on stakeholders will be a constraint on growth and ultimately be bad for society.
D) A focus on shareholders will be a constraint on growth and ultimately be bad for society.

Question 30

The Higgs Report was undertaken to investigate:

A) The reasons for the Enron collapse.
B) Control and reporting functions of board of directors and the role of auditors.
C) Executive remuneration.
D) The role and effectiveness of non-executive directors

Question 31

The UK government was forced to use tax payers' money to bail out failing British banks RBS and Lloyds Banking Group to prevent their collapse. What went wrong with these and similar financial institutions?

A) Bad regulation of these institutions.
B) The pursuit of greed.
C) Moral hazard occurs when people become indifferent to the consequences of their actions because they do not have to meet the costs.
D) Instead of long-term commitment to institutions, there was short-term opportunism in pursuit of person gain.

Question 32

For Carrol, for a company to be considered socially responsive it needs to meet some of the four responsibilities (economics, legal, ethical, philanthropic)

Question 33

To achieve the trade-off between the competing needs of stakeholders, companies should accept the maximization of long-run value of the organization as.