Question 1

The relatively low cost of compliance with the Sarbanes-Oxley Act (SOX) has been a surprising benefit of the act.

Accepted Answer

The cost of compliance with SOX has been high for many companies, with estimates ranging from hundreds of thousands to millions of dollars per year.

Question 2

The deliberation of the of the process demonstrated in the European-Japanese system of corporate governance has sometimes been termed:

Accepted Answer

The term used to describe the process in the European-Japanese system of corporate governance is "patient capital." This refers to the long-term focus and commitment of investors in these systems, which prioritize stability and sustainable growth over short-term gains. The other choices, such as socialism, communism, and impatient capital, do not accurately capture the essence of this system.

Question 3

The Board of Directors:

Accepted Answer

The Board of Directors is the legal body responsible for the overall governance of the corporation. They are accountable to the shareholders and are ultimately responsible for the success or failure of the corporation. Choice A is incorrect because the Board of Directors typically consists of both officers and non-officers of the corporation. Choice C is incorrect because the Board of Directors is subject to the external forces of the marketplace, such as competition, economic conditions, and regulatory changes. Choice D is incorrect because the Board of Directors is typically elected by the shareholders, not appointed by the SEC.

Question 4

Having Anglo-Americans as members of the board of directors of a non-Anglo-American firm signals poor corporate governance in the firm.

Accepted Answer

There is no inherent link between the nationality of a board member and the quality of corporate governance. Board members should be chosen based on their qualifications, expertise, and ability to contribute to the company's success, regardless of their race, ethnicity, or nationality. Diversity on a board can also bring valuable perspectives and insights.

Question 5

Although there are many different cultural and legal approaches used in corporate governance worldwide, there is a growing consensus on what constitutes good corporate governance. List and explain at least three standardized common principles of good corporate governance.

Accepted Answer

The answer of Although there are many different cultural and...

Question 6

Which of the following is NOT an important concept when distinguishing between international and domestic financial management?

Accepted Answer

All of the mentioned concepts are important when distinguishing between international and domestic financial management. Corporate governance is important in ensuring transparency and accountability in the management of financial resources, while culture, history, and institutions affect the behavior of market participants and regulatory frameworks. Political risk is important in assessing the impact of political factors on financial decisions and market outcomes. Therefore, all of these concepts are relevant in discerning the differences between international and domestic financial management.

Question 7

Which of the following is NOT a possible and appropriate response by shareholders dissatisfied with existing firm management of a publicly traded firm?

Accepted Answer

All the options listed are indeed possible and appropriate responses by shareholders who are dissatisfied with the management of a publicly traded firm. Selling shares, remaining quietly disgruntled, or attempting a takeover are all actions shareholders might take based on their level of dissatisfaction and their assessment of the situation.

Question 8

Regarding comparative corporate governance regimes: Bank-based regimes characterized by government influence in bank lending and a lack of transparency is often found in countries such as Korea and Germany.

Accepted Answer

Bank-based regimes, often found in countries such as Korea and Germany, are characterized by government influence in bank lending and a lack of transparency.

Question 9

Investor protection is typically better in countries with codified civil law (the Code Napoleon) than in countries with a legal system based in English common law.

Accepted Answer

Countries with a legal system based in English common law typically offer better investor protection than countries with codified civil law systems, such as those following the Code Napoleon. This is because common law systems are more adaptable and responsive to changing business environments, often resulting in more comprehensive and up-to-date investor protection regulations.

Quiz 4: Financial Goals and Corporate Governance