Exam 4: Financial Goals and Corporate Governance

Regarding comparative corporate governance regimes: Bank-based regimes characterized by government influence in bank lending and a lack of transparency is often found in countries such as Korea and Germany.

Which of the following is NOT true regarding the stakeholder capitalism model?

In the stakeholder capitalism model (SCM) the assumption of market efficiency is absolutely critical.

In the U.S. and U.K. stock markets are characterized by ownership of firms concentrated in the hands of a few controlling shareholders. In contrast, the rest of the world tends to have more widespread ownership of shares.

The decline of share listings in the United States has led to considerable debate over whether these trends represent a fundamental global business shift away from the publicly traded corporate form, or something that is more U.S.-centric combined with the economic times. Develop an argument to why the decline happened.

Although there are many different cultural and legal approaches used in corporate governance worldwide, there is a growing consensus on what constitutes good corporate governance. List and explain at least three standardized common principles of good corporate governance.

One of the most challenging issues in the financial management of the enterprise is the possible separation of ownership from management resulting in the so-called principal agent problem. Define the agency problem, explain possible ways to alleviate the agency problem and discuss differences in across global markets.

Under the Shareholder Wealth Maximization Model (SWM) of corporate governance, poor firm performance is likely to be faced with all but which of the following?

The relatively low cost of compliance with the Sarbanes-Oxley Act (SOX) has been a surprising benefit of the act.