Exam 10: Corporate Governance

Broadly, the Dodd-Frank Wall Street Reform and Consumer Protection Act seeks to:

Monitoring by shareholders is usually accomplished through:

Historically, ____ have been at the center of German corporate governance structure.

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

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

Research suggests that institutional activism may not have a strong direct effect on firm performance but may indirectly influence the targeted firm's strategic decisions, including those concerned with international diversification and innovation.

Ethically responsible companies design and use governance mechanisms that will at least minimally satisfy stakeholders' interests.

Because of recent ineffective performance, Boards of Directors are experiencing increasing pressure from shareholders, lawmakers, and regulators to be more effective in preventing managers from acting in their own interest.

Executive compensation is a governance mechanism that seeks to align the interests of managers and owners through salaries, bonuses, and long-term incentive compensation such as stock awards and options.

The market for corporate control is composed of individuals and firms that buy ownership positions or take over potentially undervalued corporations and make changes to those corporations, including the replacement of the top managers.

Usually, large-block shareholders are considered to be those shareholders with at least ____ percent of the firm's stock.

Corporate governance is important to nations because:

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. Who is ultimately responsible for the corporate climate that resulted in this wrongdoing?

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

The CEO and Chairman of the Board of Directors Alta Corp. is dismayed by a lack of effort and insights his directors provide during Board meetings. The directors are all outsiders, experienced, and run their own successful firms. The CEO/chair genuinely seeks their greater involvement. What would you recommend?

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

Managerial employment risk is the:

Both top executives and owners of the firm wish to diversify the firm to reduce risk.

For top-level managers, Board acceptance of the acquiring firm's offer usually leads to job loss because the acquiring firm wants new leadership. If the offer is refused, however, the job loss risk is minimal.

Corporate governance is all of the following EXCEPT: