Exam 10: Corporate Governance

Long-term incentives facilitate a board of directors' pay-related decisions designed to avoid potential agency problems by linking managerial compensation to the wealth of common shareholders.

The way that U.S.corporate boards of directors are presently structured, they have little influence on the unethical behavior of top management.

Simon Leagreet, the chairperson and CEO of L-EVA Industries, Inc., has long been the major power at L-EVA.A majority of the directors are concerned that, while Mr.Leagreet has been responsible for the firm's earning above-average returns, he has been displaying a tendency toward personal extravagance at the firm's expense.In order to limit Mr.Leagreet's power, the board of directors plans to:

In the United States, the primary goal of a firm is to maximize profits to provide a financial gain to shareholders.

International Food Services (IFS) has a contract with the Marines to supply meals for its troops in Afghanistan and other foreign assignments.As a means of increasing profits, IFS has used substandard ingredients in these meals and has consistently lied about this practice during quality investigations by the Marines.Which of the following is ultimately responsible for the corporate climate that resulted in this wrongdoing?

The increased use of the market for corporate control has decreased the sophistication and variety of managerial defense tactics that are used in takeovers.

All of the following statements are true about the use of defense tactics by the target firm during a hostile takeover EXCEPT defense tactics:

Discuss the effect of the separation of ownership and control in the modern corporation.

Ownership concentration is defined by the number of large-block shareholders and the total percentage of the firm's shares they own.

A Japanese keiretsu is a:

Failures of corporate internal controls and inadequate internal control systems allowed unethical executives at such companies as Enron and WorldCom to act in their own self-interest.

Corporate governance primarily revolves around the relationship between which of the following two parties?

Recent changes to Japan's corporate governance structure include which of the following?

As a rule, shareholders prefer more product diversification than do managers because shareholders wish to reduce risk and maximize wealth.

As ownership of the corporation is diffused, shareholders' ability to monitor managerial decisions:

The Dodd-Frank Wall Street Reform and Consumer Protection Act is the most sweeping set of financial and regulatory reforms in the United States since the Great Depression.

If a stakeholder is dissatisfied with a firm, it will withdraw its support and give it to another firm.

__________ is an important influence in Japanese corporate governance structures.

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:

There has been an increased need for effective collaboration between board members and top-level managers as boards of directors have become more involved in: