Question 1

According to the Chapter 10 Strategic Focus, well-known compensation consultant Graf Crystal reported that there is a relationship between shareholder returns and CEO compensation; companies are paying CEOs for the performance they deliver.

Accepted Answer

A) True 
 B)False

Question 2

The ownership of major blocks of stock by institutional investors have resulted in all of the following EXCEPT

Accepted Answer

A)   making CEOs more accountable for their performance
B)   challenges to the decisions of boards
C)   focusing attention on ineffective boards of directors
D)   a direct effect on firm performanceE) None of the above
F) C) and D)

Question 3

Research suggests that the activism of institutional investors such as TIAA-CREF and CalPERS

Accepted Answer

A)   increases shareholder value significantly.
B)   may not have a direct effect on firm performance.
C)   is so aggressive that boards of directors have become overly cautious.
D)   has weakened the effect of other governance mechanisms.E) A) and C)
F) A) and B)

Question 4

Describe the market for corporate control and its implications for organizations.

Accepted Answer

The market for corporate control is comp...

Question 5

The separation of the positions of CEO and chairperson of the board of directors reduces the power of the CEO over firm governance practices.

Accepted Answer

A) True 
 B)False

Question 6

An advantage of severance packages is that they may encourage top level managers to accept takeover bids that are attractive to shareholders.

Accepted Answer

A) True 
 B)False

Question 7

Historically, ____ have been at the center of German corporate governance structure.

Accepted Answer

A)   banks
B)   institutional shareholders
C)   public pension funds
D)   government agenciesE) B) and C)
F) All of the above

Question 8

Research evidence suggests that ownership concentration is` associated with lower levels of firm diversification which conforms to the interests of stockholders.

Accepted Answer

A) True 
 B)False

Question 9

In general, when governance mechanisms are strong, managers have free rein in their decisions.

Accepted Answer

A) True 
 B)False

Question 10

Boards with many members from the firm's top management team tend to have weak monitoring and control systems for managerial decisions.

Accepted Answer

A) True 
 B)False

Question 11

Generally, a board member who is a source of information about a firm's day-to-day activities is classified as a(an)  ____ director.

Accepted Answer

A)   lead independent
B)   inside
C)   related
D)   encumberedE) A) and B)
F) All of the above

Question 12

The market for corporate control may not be as efficient as previously thought as recent findings suggest that those firms targeted for takeover by active corporate raiders are

Accepted Answer

A)   usually on the verge of bankruptcy.
B)   typically under-performing their industry.
C)   often performing above their industry averages.
D)   always outperforming their industry.E) B) and C)
F) None of the above

Question 13

Which of the following is a FALSE statement about corporate governance?

Accepted Answer

A)   Governance is used to establish order between parties whose interests may be in conflict.
B)   Corporate governance mechanisms sometimes fail to monitor and control top managers' decisions.
C)   Corporate governance mechanisms can be in conflict with one another.
D)   Corporate governance is best achieved with a board of directors with strong ties to management.E) A) and B)
F) C) and D)

Question 14

The separation between firm ownership and management creates a(n)  ____ relationship.

Accepted Answer

A)   governance
B)   control
C)   agency
D)   dependentE) A) and B)
F) A) and C)

Question 15

One means that is considered to improve the effectiveness of outside directors is

Accepted Answer

A)   mandating that all outside directors be drawn from government or academia rather than industry.
B)   requiring that outside directors be former executives of the firm.
C)   requiring outside directors to own significant equity stakes in the firm.
D)   requiring that outside directors be truly objective by having no ownership interest in the firm.E) A) and B)
F) A) and C)

Question 16

In 2009, estimates were that institutional owners owned roughly 10% of all U.S. equity and 20% of the equity among the 1000 largest U.S. companies.

Accepted Answer

A) True 
 B)False

Question 17

Executive compensation is a governance mechanism that seeks to align the interests of managers and owners through salaries, bonuses, and long-term incentive compensation such as stock awards and options.

Accepted Answer

A) True 
 B)False

Question 18

DDD MetalWorks plans to go public in the next two years. In order to be listed on the New York Stock Exchange, the firm will need to restructure its present board of directors which is made up of a majority outside independent directors to a board of directors that is dominated by insiders and related outsiders.

Accepted Answer

A) True 
 B)False

Question 19

An agency relationship exists when one or more persons (the principal or principals) hire another person or persons (the agent or agents) as decision-making specialists to perform a service.

Accepted Answer

A) True 
 B)False

Question 20

In the Chapter 10 Strategic Focus, all of the following are issues in executive compensation EXCEPT:

Accepted Answer

A)   Many CEOs are rewarded for short-term rather than long-term performance.
B)   CEO pay is frequently not tied to performance.
C)   The Dodd-Frank Act stipulates that stockholders have no say in the compensation packages of top executives.
D)   When using stock options as part of executive compensation, it is recommended that those options cannot be exercised for five years to avoid opportunistic behavior by executives.E) A) and B)
F) A) and C)

Exam 10: Corporate Governance

Describe the market for corporate control and its implications for organizations.

Correct Answer
verified
The market for corporate control is comp...
View Answer

An agency relationship exists when one or more persons (the principal or principals) hire another person or persons (the agent or agents) as decision-making specialists to perform a service.

Correct Answer
verified

Research evidence suggests that ownership concentration is` associated with lower levels of firm diversification which conforms to the interests of stockholders.

Correct Answer
verified

Correct Answer
verified

An advantage of severance packages is that they may encourage top level managers to accept takeover bids that are attractive to shareholders.

Correct Answer
verified

Historically, ____ have been at the center of German corporate governance structure.

Correct Answer
verified

The separation between firm ownership and management creates a(n) ____ relationship.

Correct Answer
verified

The market for corporate control may not be as efficient as previously thought as recent findings suggest that those firms targeted for takeover by active corporate raiders are

Correct Answer
verified

The ownership of major blocks of stock by institutional investors have resulted in all of the following EXCEPT

Correct Answer
verified

According to the Chapter 10 Strategic Focus, well-known compensation consultant Graf Crystal reported that there is a relationship between shareholder returns and CEO compensation; companies are paying CEOs for the performance they deliver.

Correct Answer
verified

In general, when governance mechanisms are strong, managers have free rein in their decisions.

Correct Answer
verified

One means that is considered to improve the effectiveness of outside directors is

Correct Answer
verified

Which of the following is a FALSE statement about corporate governance?

Correct Answer
verified

Generally, a board member who is a source of information about a firm's day-to-day activities is classified as a(an) ____ director.

Correct Answer
verified

Executive compensation is a governance mechanism that seeks to align the interests of managers and owners through salaries, bonuses, and long-term incentive compensation such as stock awards and options.

Correct Answer
verified

Boards with many members from the firm's top management team tend to have weak monitoring and control systems for managerial decisions.

Correct Answer
verified

In the Chapter 10 Strategic Focus, all of the following are issues in executive compensation EXCEPT:

Correct Answer
verified

The separation of the positions of CEO and chairperson of the board of directors reduces the power of the CEO over firm governance practices.

Correct Answer
verified

In 2009, estimates were that institutional owners owned roughly 10% of all U.S. equity and 20% of the equity among the 1000 largest U.S. companies.

Correct Answer
verified

Research suggests that the activism of institutional investors such as TIAA-CREF and CalPERS

Correct Answer
verified

Exam 10: Corporate Governance

Describe the market for corporate control and its implications for organizations.

Correct AnswerverifiedThe market for corporate control is comp...View AnswerShow Answer

An agency relationship exists when one or more persons (the principal or principals) hire another person or persons (the agent or agents) as decision-making specialists to perform a service.

Correct AnswerverifiedShow Answer

Research evidence suggests that ownership concentration is` associated with lower levels of firm diversification which conforms to the interests of stockholders.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An advantage of severance packages is that they may encourage top level managers to accept takeover bids that are attractive to shareholders.

Correct AnswerverifiedShow Answer

Historically, ____ have been at the center of German corporate governance structure.

Correct AnswerverifiedShow Answer

The separation between firm ownership and management creates a(n) ____ relationship.

Correct AnswerverifiedShow Answer

The market for corporate control may not be as efficient as previously thought as recent findings suggest that those firms targeted for takeover by active corporate raiders are

Correct AnswerverifiedShow Answer

The ownership of major blocks of stock by institutional investors have resulted in all of the following EXCEPT

Correct AnswerverifiedShow Answer

According to the Chapter 10 Strategic Focus, well-known compensation consultant Graf Crystal reported that there is a relationship between shareholder returns and CEO compensation; companies are paying CEOs for the performance they deliver.

Correct AnswerverifiedShow Answer

In general, when governance mechanisms are strong, managers have free rein in their decisions.

Correct AnswerverifiedShow Answer

One means that is considered to improve the effectiveness of outside directors is

Correct AnswerverifiedShow Answer

Which of the following is a FALSE statement about corporate governance?

Correct AnswerverifiedShow Answer

Generally, a board member who is a source of information about a firm's day-to-day activities is classified as a(an) ____ director.

Correct AnswerverifiedShow Answer

Executive compensation is a governance mechanism that seeks to align the interests of managers and owners through salaries, bonuses, and long-term incentive compensation such as stock awards and options.

Correct AnswerverifiedShow Answer

Boards with many members from the firm's top management team tend to have weak monitoring and control systems for managerial decisions.

Correct AnswerverifiedShow Answer

In the Chapter 10 Strategic Focus, all of the following are issues in executive compensation EXCEPT:

Correct AnswerverifiedShow Answer

The separation of the positions of CEO and chairperson of the board of directors reduces the power of the CEO over firm governance practices.

Correct AnswerverifiedShow Answer

In 2009, estimates were that institutional owners owned roughly 10% of all U.S. equity and 20% of the equity among the 1000 largest U.S. companies.

Correct AnswerverifiedShow Answer

Research suggests that the activism of institutional investors such as TIAA-CREF and CalPERS

Correct AnswerverifiedShow Answer

Correct Answer
verified
The market for corporate control is comp...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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