Question 1

Complete the following: In small firms, managers often own a ____ percentage of the firm, which means there is ____ separation between ownership and managerial control.

Accepted Answer

A)  small; small 
B)  small; large 
C)  large; small 
D)  large; large 
A)  small; small 
B)  small; large 
C)  large; small 
D)  large; large

Question 2

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. 
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.

Question 3

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

Accepted Answer

Governance mechanisms focus on the contr

Question 4

Managers may decide to invest ____ in products that are not associated with the firm's current lines of business to increase the firm's level of diversification and decrease their employment risk.

Accepted Answer

A)  unsubstantial profits 
B)  free cash flows 
C)  marginal profits 
D)  frozen assets 
A)  unsubstantial profits 
B)  free cash flows 
C)  marginal profits 
D)  frozen assets

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

Ownership is typically separated from co

Question 7

____ is an important influence in Japanese corporate governance structures.

Accepted Answer

A)  Innovation 
B)  Consensus 
C)  Competition 
D)  Individualism 
A)  Innovation 
B)  Consensus 
C)  Competition 
D)  Individualism

Question 8

The interests of multinational corporations' shareholders may be best served when there is:

Accepted Answer

A)  a uniform compensation plan for all corporate executives, United States and foreign alike. 
B)  executive compensation that is primarily based on long-term performance. 
C)  elevation of foreign executive compensation to U.S. levels. 
D)  a variety of compensation plans for executives of foreign subsidiaries. 
A)  a uniform compensation plan for all corporate executives, United States and foreign alike. 
B)  executive compensation that is primarily based on long-term performance. 
C)  elevation of foreign executive compensation to U.S. levels. 
D)  a variety of compensation plans for executives of foreign subsidiaries.

Question 9

The top management team at Sierra Infusion is concerned about the declining performance of firms in their industry. The team members are becoming concerned about the security of their jobs at Sierra Infusion. At a meeting over dinner, the top management team agrees to go to the Board of Directors with a proposal for:

Accepted Answer

A)  increased diversification of Sierra Infusion. 
B)  the addition of outside directors to the Board. 
C)  increased shareholder participation in decision making. 
D)  greater concentration on Sierra's core industry. 
A)  increased diversification of Sierra Infusion. 
B)  the addition of outside directors to the Board. 
C)  increased shareholder participation in decision making. 
D)  greater concentration on Sierra's core industry.

Question 10

In a large number of family owned firms, ownership and managerial control are not separated.

Accepted Answer

A) True 
 B)False

Question 11

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. 
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.

Question 12

The most effective defense against a hostile takeover is the poison pill strategy.

Accepted Answer

A) True 
 B)False

Question 13

Boards of Directors are now becoming more involved in:

Accepted Answer

A)  the strategic decision-making process. 
B)  selecting new CEOs. 
C)  the firm's tax issues. 
D)  governmental relations. 
A)  the strategic decision-making process. 
B)  selecting new CEOs. 
C)  the firm's tax issues. 
D)  governmental relations.

Question 14

An agency relationship exists when one party delegates:

Accepted Answer

A)  decision-making responsibility to a second party. 
B)  financial responsibility to employees. 
C)  strategy implementation actions to functional managers. 
D)  ownership of a company to a second party. 
A)  decision-making responsibility to a second party. 
B)  financial responsibility to employees. 
C)  strategy implementation actions to functional managers. 
D)  ownership of a company to a second party.

Question 15

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 16

Because top management decisions are usually complex and nonroutine, determining the quality of executive performance is beyond the power of Boards of Directors.

Accepted Answer

A) True 
 B)False

Question 17

Several members of the Board of Directors of American Textile Products (ATP) have proposed creating the position of lead director. What circumstances would most likely have initiated this proposal?

Accepted Answer

A)  ATP has been the initiator of several hostile takeovers in the last 2 years. 
B)  The Board has been successful in reducing the percentage of CEO pay that is composed of stock options. 
C)  The CEO/chairperson of the Board has been suspected of opportunistic behavior. 
D)  The firm is traded on the New York Stock Exchange and must change its corporate governance to comply with the NYSE's new rules. 
A)  ATP has been the initiator of several hostile takeovers in the last 2 years. 
B)  The Board has been successful in reducing the percentage of CEO pay that is composed of stock options. 
C)  The CEO/chairperson of the Board has been suspected of opportunistic behavior. 
D)  The firm is traded on the New York Stock Exchange and must change its corporate governance to comply with the NYSE's new rules.

Question 18

Awareness by top managers of the existence of external investors in the form of individuals (e.g., Carl Icahn) and groups (e.g., hedge funds) often positively influences them to align their interests with shareholders.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)  greenmail. 
B)  a standstill agreement. 
C)  crossing the palm with silver. 
D)  a poison pill. 
A)  greenmail. 
B)  a standstill agreement. 
C)  crossing the palm with silver. 
D)  a poison pill.

Question 20

The primary role of the Board of Directors is to monitor and control top-level executives to protect owners' interests.

Accepted Answer

A) True 
 B)False

Complete the following: In small firms, managers often own a percentage of the firm, which means there is separation between ownership and managerial control.

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

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

Managers may decide to invest ____ in products that are not associated with the firm's current lines of business to increase the firm's level of diversification and decrease their employment risk.

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

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

____ is an important influence in Japanese corporate governance structures.

The interests of multinational corporations' shareholders may be best served when there is:

In a large number of family owned firms, ownership and managerial control are not separated.

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:

The most effective defense against a hostile takeover is the poison pill strategy.

Boards of Directors are now becoming more involved in:

An agency relationship exists when one party delegates:

The separation of the positions of CEO and chairperson of the Board of Directors reduces the power of the CEO over firm governance practices.

Because top management decisions are usually complex and nonroutine, determining the quality of executive performance is beyond the power of Boards of Directors.

Several members of the Board of Directors of American Textile Products (ATP) have proposed creating the position of lead director. What circumstances would most likely have initiated this proposal?

Awareness by top managers of the existence of external investors in the form of individuals (e.g., Carl Icahn) and groups (e.g., hedge funds) often positively influences them to align their interests with shareholders.

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

The primary role of the Board of Directors is to monitor and control top-level executives to protect owners' interests.

Strategic Management and Strategic Competitiveness

The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis

The Internal Organization: Resources, Capabilities, Core Competencies, and Competitive Advantages

Business-Level Strategy

Competitive Rivalry and Competitive Dynamics

Corporate-Level Strategy

Merger and Acquisition Strategies

International Strategy

Cooperative Strategy

Organizational Structure and Controls

Strategic Leadership

Strategic Entrepreneurship

Filters

Exam 10: Corporate Governance

Complete the following: In small firms, managers often own a ____ percentage of the firm, which means there is ____ separation between ownership and managerial control.

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

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

Managers may decide to invest ____ in products that are not associated with the firm's current lines of business to increase the firm's level of diversification and decrease their employment risk.

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

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

____ is an important influence in Japanese corporate governance structures.

The interests of multinational corporations' shareholders may be best served when there is:

In a large number of family owned firms, ownership and managerial control are not separated.

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:

The most effective defense against a hostile takeover is the poison pill strategy.

Boards of Directors are now becoming more involved in:

An agency relationship exists when one party delegates:

The separation of the positions of CEO and chairperson of the Board of Directors reduces the power of the CEO over firm governance practices.

Because top management decisions are usually complex and nonroutine, determining the quality of executive performance is beyond the power of Boards of Directors.

Several members of the Board of Directors of American Textile Products (ATP) have proposed creating the position of lead director. What circumstances would most likely have initiated this proposal?

Awareness by top managers of the existence of external investors in the form of individuals (e.g., Carl Icahn) and groups (e.g., hedge funds) often positively influences them to align their interests with shareholders.

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

The primary role of the Board of Directors is to monitor and control top-level executives to protect owners' interests.

Strategic Management and Strategic Competitiveness

The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis

The Internal Organization: Resources, Capabilities, Core Competencies, and Competitive Advantages

Business-Level Strategy

Competitive Rivalry and Competitive Dynamics

Corporate-Level Strategy

Merger and Acquisition Strategies

International Strategy

Cooperative Strategy

Organizational Structure and Controls

Strategic Leadership

Strategic Entrepreneurship

Filters

Complete the following: In small firms, managers often own a percentage of the firm, which means there is separation between ownership and managerial control.