Question 1

Which one the following statements is true?&#10;A)The Dodd-Frank Act in the USA is on a &#34;comply or explain&#34; basis.&#10;B)The recommendations of UK codes of best practice in corporate governance are on a &#34;comply or explain&#34; basis for unlisted firms, but compulsory for listed firms.&#10;C)Successive codes of best practice in the UK have recommended the separation of the roles of the CEO and the chair of the board of directors.&#10;D)None of the above.

Accepted Answer

The UK's codes of best practice in corporate governance have indeed recommended the separation of the roles of CEO and chair of the board of directors to ensure a balance of power and increase accountability within organizations. This separation is aimed at preventing a concentration of power in a single individual, which is considered a risk to good governance.

Question 2

Compared to US regulation, UK regulation on corporate governance is ...&#10;A)a fairly recent innovation.&#10;B)much less prescriptive.&#10;C)much more rule based.&#10;D)much more prescriptive.

Accepted Answer

UK regulation on corporate governance is much less prescriptive compared to US regulation. UK corporate governance practices are based on a code of best practices, unlike the US where there are stricter regulations and laws governing corporate governance. The UK Corporate Governance Code encourages companies to implement good governance practices voluntarily rather than mandating them through regulations.

Question 3

Which one of the following statements is correct?&#10;A)Some studies have found a positive effect of female CEOs on firm performance, but a negative effect of other female directors.&#10;B)Empirical evidence suggests that effect of female board representation depends on the industry.&#10;C)Both of the above statements are correct.&#10;D)None of the above.

Accepted Answer

Some studies have found that female CEOs have a positive effect on firm performance, but the effect of other female directors is negative. Additionally, empirical evidence suggests that the impact of female board representation depends on the industry, with some industries experiencing a more positive effect than others. Therefore, both statement A and B are correct.

Question 4

Which one of the below statements about the 'comply or explain' approach to corporate governance regulation is correct?&#10;A)This approach has generally worked well outside the UK.&#10;B)This has been the US approach to corporate governance regulation.&#10;C)This approach was abandoned by the UK in the aftermath of the 2008 financial crisis.&#10;D)None of the above.

Accepted Answer

The 'comply or explain' approach is a hallmark of UK corporate governance regulation, not primarily associated with the US approach, and it has not been abandoned by the UK after the 2008 financial crisis. It remains a fundamental principle within the UK Corporate Governance Code, allowing companies to either comply with the code or explain why they have not, thus providing flexibility while maintaining accountability.

Question 5

Which one of the following statements is correct?&#10;A)The G20/OECD Principles explicitly mention the role of stakeholders in the firm and that their rights should be observed as prescribed by law and regulation.&#10;B)The G20/OECD Principles are modelled on the Anglo-American system of corporate governance.&#10;C)The G20/OECD Principles of Corporate Governance advocate the maximisation of shareholder value and do not take into account the role of other stakeholders in the firm.&#10;D)None of the above.

Accepted Answer

The correct statement is that the G20/OECD Principles explicitly mention the role of stakeholders in the firm and that their rights should be observed as prescribed by law and regulation. Option B is incorrect as the G20/OECD Principles draw on a range of international best practices and are not modelled solely on the Anglo-American system. Option C is also incorrect as the G20/OECD Principles advocate a balanced approach that takes into account the interests of all stakeholders, including shareholders, creditors, employees, and customers.

Question 6

Which one of the following statements is correct?&#10;A)A staggered board is a type of anti-takeover device.&#10;B)Most UK firms have anticipatory takeover defences in place.&#10;C)Anti-takeover devices are common place in UK firms.&#10;D)None of the above.

Accepted Answer

A staggered board is a common anti-takeover device used in US firms, where not all board members are up for re-election at the same time, making it difficult for an acquiring company to gain control of the board. However, in the UK, it is less common to have such explicit anti-takeover devices in place, and instead, firms might have anticipatory takeover defenses, such as share structures or golden shares. Therefore, options B and C are not correct.

Deck 6: Corporate Governance Regulation in an International Context