Deck 2: Corporate Governance and Social Responsibility

Question 1

Which of the following is NOT a task of the board of directors in strategic management?

A) to monitor
B) to implement
C) to influence
D) to initiate and determine
E) to evaluate

Answer 1

B

Question 2

The percentage of CEOs of U.S. Fortune 500 corporations who also serve as chairman of the board is

A) less than 10%.
B) 20%.
C) 50%.
D) 70%.
E) over 90%.

Answer 2

D

Question 3

The CEO must successfully handle two responsibilities crucial to effective strategic management -

A) look like a strategist and act like a strategist.
B) balance many demands and show initiative.
C) think long term and act short term.
D) provide executive leadership and manage the strategic planning process.
E) articulate a strategic vision and communicate high performance standards.

Answer 3

D

Question 4

Outsiders make up to what percentage of board membership in large U.S. corporations?

A) 10%
B) 30%
C) 50%
D) 80%
E) 90%

Question 5

The concept which states that directors must carry out their responsibilities in a conscientious manner so that the corporation is not harmed by their actions is called

A) codetermination.
B) due diligence.
C) cumulative voting.
D) accountability.
E) due care.

Question 6

Corporate governance deals with the relationship among the board of directors, top management, and

A) key stakeholder groups, such as customers and employees.
B) shareholders.
C) middle management.
D) environmental issues.
E) strategic factors.

Question 7

Under what circumstances does a DIRECT interlocking directorate exist?

A) When both management and the board establish corporate strategic management.
B) When a corporation's employees serve on its board.
C) When one or more individuals on one board also serve on a board of a second firm.
D) Present when all board members are also employed by the corporation.
E) Occurs when two corporations have directors who serve on the board of a third firm.

Question 8

Outside directors are defined as

A) those individuals who scan the external environment.
B) individuals on the board who are not employed by the board's corporation.
C) those individuals with public relations responsibilities.
D) board members who are also officers or executives employed by the corporation.
E) individuals who organize and coordinate politically focused activities.

Question 9

Economist Milton Friedman has argued that a business's only responsibility is to

A) maximize profits in a legal manner.
B) sustain its market share.
C) promote the welfare of society.
D) satisfy its employees.
E) satisfy its customers.

Question 10

The responsibilities of the board of directors vary significantly by country and by state; however, there is a developing consensus as to what the major responsibilities should be. Which of the following is NOT one of the major responsibilities?

A) To oversee the management of the corporation's resources.
B) To establish or approve the corporation's mission, objectives, strategy, and policies.
C) To review management's actions in light of the financial performance or the corporation.
D) To become directly involved in managerial decisions.
E) To hire and fire the principal operating officers of the corporation.

Question 11

One result of the U.S. of the Sarbanes-Oxley Act is that

A) boards may no longer grant loans to corporate officers.
B) top management must provide a financial expert to serve on the audit committee.
C) boards must be entirely composed of outsiders.
D) whistle blowers are no longer protected.
E) a CEO can no longer act as a board chairperson.

Question 12

Catalyst board of directors typically

A) are less involved than active participation boards.
B) take leading roles in establishing and modifying the company mission.
C) are involved in a limited degree of key decision making.
D) are held to a greater degree of legal responsibility.
E) experience more financial success than less involved boards.

Question 13

Which of the following is a trend in corporate governance?

A) Increasing percentage of insiders on the board.
B) Less stock ownership by directors and executives.
C) Increasing numbers of institutional investors on the board.
D) Less willingness of the board to consider issues in social responsibility.
E) Increasing use of consultants in formulating strategy.

Question 14

Affiliated directors are

A) employees of the corporation.
B) directors in an interlocking directorate.
C) outside directors who have a personal or business stake in corporate activities.
D) agents of top management.
E) executives of other firms.

Question 15

An outside director selected by the board to conduct an evaluation of the CEO is called

A) an auditing director.
B) the evaluator.
C) the chair of the evaluation committee.
D) the chairman of the board.
E) a lead director.

Question 16

The responsibilities that management of a business organization assumes as purely voluntary obligations are

A) legal responsibilities.
B) ethical responsibilities.
C) financial responsibilities.
D) economic responsibilities.
E) discretionary responsibilities.

Question 17

Which one of the following is NOT one of the arguments against social responsibility as used by economist Milton Friedman?

A) Spending money for social responsibility is spending the stockholder's money for a general social
Interest.
B) Businesses can actually do very little in terms of social responsibility.
C) Spending money on social responsibility is acting from motives other than economic and may, in the long run, cause harm to the very society the firm is trying to help.
D) There is one and only one social responsibility of business -- to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.
E) Through taking on the burden of social costs, the organization becomes less efficient causing price increases or postponement of growth.

Question 18

Which of the following is NOT a characteristic of a top manager providing executive leadership?

A) The CEO presents a role for others to identify with and to follow.
B) The CEO articulates a strategic vision for the corporation.
C) The CEO communicates high performance standards.
D) The CEO shows confidence in people's abilities to reach a high level of performance.
E) The CEO personally formulates and implements all strategy.

Question 19

The vast majority of outside directors are all BUT ONE of the following:

A) union representatives.
B) CEOs.
C) COOs.
D) academicians.
E) attorneys.

Question 20

In a large corporation, the agents in agency theory are

A) shareholders.
B) the board of directors.
C) employees.
D) stakeholder groups.
E) top management.

Question 21

The term "social responsibility" can be viewed as a combination of an

A) organization's ethical and discretionary responsibilities.
B) organization's legal and ethical responsibilities.
C) organization's economic and ethical responsibilities.
D) organization's financial and economic responsibilities.
E) organization's legal and discretionary responsibilities.

Question 22

A group of people who affect or are affected by a corporation's decisions and actions are called

A) stockholders.
B) stakeholders.
C) shareholders.
D) customers.
E) affiliates.

Question 23

The ethical approach that proposes that decision makers be equitable, fair, and impartial in the distribution of costs and benefits to individuals and groups is the

A) individual rights approach.
B) utilitarian approach.
C) justice approach.
D) fair approach.
E) best approach.