Exam 10: Corporate Governance

In the United States, the members of the board of directors are a firm's key stakeholders and a company's legal owners.

MTW 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.

James Abercrombie has a thriving consulting firm specializing in training boards of directors in decision-making skills.Mr.Abercrombie has had striking success in reducing conflict and hostility among directors and allowing boards to develop more cohesiveness.Mr.Abercrombie is considering expanding his consulting practice overseas.Which of the following statements is most likely to be true?

German executives are not dedicated to the maximization of shareholder value to the degree that is the case for executives in the United Kingdom and the United States largely because:

Well-designed stock option-based compensation plans should have the option strike prices substantially lower than the current stock prices.

Hedge funds, as part of the market for corporate control, identify a firm that is underperforming and then invest in it with the goal of improving that firm's performance.

More than three-fourths of the members of the PeteSys board of directors are also part of the firm's top management team.Because of their inside knowledge, this should lead to strong monitoring and control systems for managerial decisions in the firm.

Attitudes toward corporate governance in Japan are affected by the concepts of obligation, family, and consensus.

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

Briefly compare and contrast corporate governance in the United States, Germany, Japan, and China.

The governance mechanism MOST closely connected with deterring unethical behaviors by holding top management accountable for the corporate culture is:

Stock option repricing, where the strike price value of the option has been lowered from its original position, sometimes happens when firm performance is poor.

How does corporate governance foster ethical strategic decisions, and how important is this to top-level executives?

A hostile takeover defense wherein the target firm makes its stock less attractive to a potential acquirer is called:

Corporate governance involves oversight in areas where owners, managers, and members of boards of directors may have conflicts of interest.

Ownership of many modern corporations is now concentrated in the hands of institutional investors rather than individual stockholders.

In the modern large U.S.corporation, the ownership and managerial control of the firm are separated.

A top-level manager's reputation is a dependable predictor of his/her future behavior.

Define the agency relationship and managerial opportunism and explain their strategic implications.

Several members of the board of directors of American Textile Products (ATP) have proposed creating the position of lead director.Which of the following circumstances would MOST likely have initiated this proposal?