Exam 13: Corporate Governance

Research, such as the study by Fich and Shivdasani, has shown that companies that have over half of the outside directors sitting on three or more boards have which of the following?

Core, Holthausen, and Larker's research found that CEO compensation was greater for the directors who were gray, over age 69, or who served on three or more boards.

One study by Cyert, Kang, and Kumar of a large sample of companies found:

Research shows that companies tend to have positive shareholder wealth effects when outside directors are added to a company's board.

Malmendier and Tate analyzed the performance of CEOs who were awarded "superstar CEOs" status in the form of relatively high compensation, awards, and press coverage. They found:

Answer: Malmendier and Tate analyzed the role of CEO overconfidence in the tendency for CEOs to engage in M&As. They measured CEO overconfidence using factors such as the tendency for CEOs to hold options in their company's stock until their expiration.

When challenged, which is not common, courts have found golden parachute agreements to be an illegal giveaway of shareholder wealth.

A study by Hartzell, Ofek, and Yermack showed that in deals where target CEOs enjoyed extraordinary personal treatment and benefits, such as high compensation or other special benefits, shareholders received lower acquisition premiums.

Research, such as a study by Hallock, shows the CEO compensation is higher for company with interlocked boards.

Foreign companies which have what percent of the trading volume on U.S. exchanges have to comply with SOX:

Answer: A study by Core, Holthausen, and Larker, as well as other research, indicates the following characteristics of boards would be desirable:

Research, such as research by David Yermack, has found which of the following with respect to larger board size:

The European Union has enacted its own version of the Sarbanes-Oxley Act. It is called:

Cooper, Gulen, and Rau found that firms in the highest decile ranking of executive compensation earned significant negative excess returns.

Yermack found that companies which had significant managerial perks such as use of corporate aircraft:

Lambert and Larker found that the trigger control percentage for activation of golden parachutes agreements was when a bidder acquired approximately 51% of the company outstanding stock.

Core, Holthausen, and Larker's research found:

Stock options are one method which may be used to align management and shareholder's interests.

Research by Bizjak, Lemmon, and Nguyen provided support for the contention that the peer group used to determine the CEO's compensation level tends to be opportunistically selected so as to derive a higher compensation level for the CEOs.