Question 1

The key requirements of the Cadbury Code of Best Practice state that

Accepted Answer

A) the compensation, nominating, and audit committees to be entirely composed of independent directors. 
B) the positions of CEO and chairman of the board should not reside in the same individual. 
C) listed companies to have boards of directors with a majority of independents. 
D) none of the above 
A) the compensation, nominating, and audit committees to be entirely composed of independent directors. 
B) the positions of CEO and chairman of the board should not reside in the same individual. 
C) listed companies to have boards of directors with a majority of independents. 
D) none of the above

Question 2

To formula to compute the value of the "block premium" is

Accepted Answer

A)    . 
B)    . 
C)    . 
D)    . 
A)    . 
B)    . 
C)    . 
D)    .

Question 3

In the United States, managers are legally bound by the "duty of loyalty" to

Accepted Answer

A) the board of directors. 
B) the shareholders. 
C) the bondholders. 
D) the government. 
A) the board of directors. 
B) the shareholders. 
C) the bondholders. 
D) the government.

Question 4

Comparing the U.S. with the German and Japanese corporate governance systems,

Accepted Answer

A) the U.S. system is "market centered". 
B) the German and Japanese systems are "bank centered". 
C) it seems fair to say that no country has a perfect system. 
D) all of the above. 
A) the U.S. system is "market centered". 
B) the German and Japanese systems are "bank centered". 
C) it seems fair to say that no country has a perfect system. 
D) all of the above.

Question 5

The major components of the Sarbanes-Oxley Act are:

Accepted Answer

A) accounting regulation-The creation of a public accounting oversight board charged with overseeing the auditing of public companies, and restricting the consulting services that auditors can provide to clients. 
B) audit committee-The company should appoint independent "financial experts" to its audit committee. 
C) internal control assessment-Public companies and their auditors should assess the effectiveness of internal control of financial record keeping and fraud prevention. 
D) executive responsibility-Chief executive and finance officers (CEO and CFO) must sign off on the company's quarterly and annual financial statements. If fraud causes an overstatement of earnings, these officers must return any bonuses. 
E) all of the above 
A) accounting regulation-The creation of a public accounting oversight board charged with overseeing the auditing of public companies, and restricting the consulting services that auditors can provide to clients. 
B) audit committee-The company should appoint independent "financial experts" to its audit committee. 
C) internal control assessment-Public companies and their auditors should assess the effectiveness of internal control of financial record keeping and fraud prevention. 
D) executive responsibility-Chief executive and finance officers (CEO and CFO) must sign off on the company's quarterly and annual financial statements. If fraud causes an overstatement of earnings, these officers must return any bonuses. 
E) all of the above

Question 6

Corporate governance structure

Accepted Answer

A) varies a great deal across countries. 
B) has become homogenized following the integration of capital markets. 
C) has become homogenized due to cross-listing of shares of many public corporations. 
D) none of the above 
A) varies a great deal across countries. 
B) has become homogenized following the integration of capital markets. 
C) has become homogenized due to cross-listing of shares of many public corporations. 
D) none of the above

Question 7

In the graph at right, for Fortune 500 companies, X, Y are

Accepted Answer

A) 5% and 25%. 
B) 15% and 50%. 
C) 50% and 75%. 
D) None of the above 
A) 5% and 25%. 
B) 15% and 50%. 
C) 50% and 75%. 
D) None of the above

Question 8

Self-interested managers may be tempted to

Accepted Answer

A) indulge in expensive perquisites at company expense. 
B) adopt anti-takeover measures for their company to ensure their personal job security. 
C) waste company funds by undertaking unprofitable projects that benefit themselves but not shareholders. 
D) all of the above are potential abuses that self-interested managers may be tempted to visit upon shareholders. 
A) indulge in expensive perquisites at company expense. 
B) adopt anti-takeover measures for their company to ensure their personal job security. 
C) waste company funds by undertaking unprofitable projects that benefit themselves but not shareholders. 
D) all of the above are potential abuses that self-interested managers may be tempted to visit upon shareholders.

Question 9

Following the adoption of the Cadbury Code of Best practice joint CEO/COB positions declined

Accepted Answer

A) from 27 percent of the companies before the adoption to 15 percent afterwards. 
B) from 37 percent of the companies before the adoption to 15 percent afterwards. 
C) from 47 percent of the companies before the adoption to 15 percent afterwards. 
D) from 57 percent of the companies before the adoption to 15 percent afterwards. 
A) from 27 percent of the companies before the adoption to 15 percent afterwards. 
B) from 37 percent of the companies before the adoption to 15 percent afterwards. 
C) from 47 percent of the companies before the adoption to 15 percent afterwards. 
D) from 57 percent of the companies before the adoption to 15 percent afterwards.

Question 10

Accounting Transparency

Accepted Answer

A) can only be achieved when managers commit to serving on their own audit committee. 
B) occurs when the accounting department has translucent cubicles for their workers. 
C) promises to reduce the information asymmetry between corporate insiders and the public. 
D) none of the above 
A) can only be achieved when managers commit to serving on their own audit committee. 
B) occurs when the accounting department has translucent cubicles for their workers. 
C) promises to reduce the information asymmetry between corporate insiders and the public. 
D) none of the above

Question 11

One of the objectives of corporate governance reform is to,

Accepted Answer

A) introduce expensive and burdensome accounting reforms. 
B) strengthen the protection of outside investors from expropriation by managers and controlling insiders. 
C) provide taxpayer financing for corporate raiders to strengthen the discipline of the marketplace. 
D) none of the above 
A) introduce expensive and burdensome accounting reforms. 
B) strengthen the protection of outside investors from expropriation by managers and controlling insiders. 
C) provide taxpayer financing for corporate raiders to strengthen the discipline of the marketplace. 
D) none of the above

Question 12

The strongest protection for investors is provided by

Accepted Answer

A) English common law countries, such as Canada, the United States, and the U.K. 
B) French civil law countries, such as Belgium, Italy, and Mexico. 
C) a weak board of directors. 
D) socialized firms. 
A) English common law countries, such as Canada, the United States, and the U.K. 
B) French civil law countries, such as Belgium, Italy, and Mexico. 
C) a weak board of directors. 
D) socialized firms.

Question 13

The objective of corporate governance reform should be what?

Accepted Answer

A) Strengthen the protection of outside investors from expropriation by managers 
B) Strengthen the protection of outside investors from expropriation by controlling insiders 
C) Both a and b 
D) None of the above 
A) Strengthen the protection of outside investors from expropriation by managers 
B) Strengthen the protection of outside investors from expropriation by controlling insiders 
C) Both a and b 
D) None of the above

Question 14

The agency problem refers to the possible conflicts of interest between

Accepted Answer

A) self-interested managers as principals and shareholders of the firm who are the agents. 
B) altruistic managers as agents and shareholders of the firm who are the principals. 
C) self-interested managers as agents and shareholders of the firm who are the principals. 
D) dutiful managers as principals and shareholders of the firm who are the agents. 
A) self-interested managers as principals and shareholders of the firm who are the agents. 
B) altruistic managers as agents and shareholders of the firm who are the principals. 
C) self-interested managers as agents and shareholders of the firm who are the principals. 
D) dutiful managers as principals and shareholders of the firm who are the agents.

Question 15

The Sarbanes-Oxley Act of 2002

Accepted Answer

A) applies to all U.S. firms. 
B) applies to listed companies. 
C) applies to issuers whose securities are traded on an over-the-counter bulletin board. 
D) all of the above 
A) applies to all U.S. firms. 
B) applies to listed companies. 
C) applies to issuers whose securities are traded on an over-the-counter bulletin board. 
D) all of the above

Question 16

The Cadbury Code of Best Practice

Accepted Answer

A) is the U.N. equivalent of the Sarbanes-Oxley Act. 
B) is voluntary, but firms that fail to comply must explain why they choose not to comply. 
C) has the force of law, like the Sarbanes-Oxley Act. 
D) none of the above 
A) is the U.N. equivalent of the Sarbanes-Oxley Act. 
B) is voluntary, but firms that fail to comply must explain why they choose not to comply. 
C) has the force of law, like the Sarbanes-Oxley Act. 
D) none of the above

Question 17

Outside the United States and the United Kingdom,

Accepted Answer

A) concentrated ownership of the company is more the exception than the rule. 
B) diffused ownership of the company is more the exception than the rule. 
C) partnerships are more important than corporations. 
D) none of the above 
A) concentrated ownership of the company is more the exception than the rule. 
B) diffused ownership of the company is more the exception than the rule. 
C) partnerships are more important than corporations. 
D) none of the above

Question 18

The key strengths of the public corporation is/are

Accepted Answer

A) their capacity to allow efficient risk sharing among many investors. 
B) their capacity to raise large amounts of funds at relatively low cost. 
C) their capacity to consolidate decision-making. 
D) all of the above 
A) their capacity to allow efficient risk sharing among many investors. 
B) their capacity to raise large amounts of funds at relatively low cost. 
C) their capacity to consolidate decision-making. 
D) all of the above

Question 19

Benetton, an Italian clothier, is listed on the New York Stock Exchange.

Accepted Answer

A) This decision provides their shareholders with a higher degree of protection than is available in Italy. 
B) This decision can be a signal of the company's commitment to shareholder rights. 
C) This may make investors both in Italy and abroad more willing to provide capital and to increase the value of the pre-existing shares. 
D) All of the above 
A) This decision provides their shareholders with a higher degree of protection than is available in Italy. 
B) This decision can be a signal of the company's commitment to shareholder rights. 
C) This may make investors both in Italy and abroad more willing to provide capital and to increase the value of the pre-existing shares. 
D) All of the above

Question 20

The cost of compliance with the Sarbanes-Oxley Act

Accepted Answer

A) is a small amount, since most firms were playing by rules to begin with. 
B) disproportionately affects small firms. 
C) is paid for with tax credits for firms found to be in compliance. 
D) both a and c 
A) is a small amount, since most firms were playing by rules to begin with. 
B) disproportionately affects small firms. 
C) is paid for with tax credits for firms found to be in compliance. 
D) both a and c

Exam 4: Corporate Governance Around the World

The key requirements of the Cadbury Code of Best Practice state that

To formula to compute the value of the "block premium" is

In the United States, managers are legally bound by the "duty of loyalty" to

Comparing the U.S. with the German and Japanese corporate governance systems,

The major components of the Sarbanes-Oxley Act are:

Corporate governance structure

In the graph at right, for Fortune 500 companies, X, Y are

Self-interested managers may be tempted to

Following the adoption of the Cadbury Code of Best practice joint CEO/COB positions declined

Accounting Transparency

One of the objectives of corporate governance reform is to,

The strongest protection for investors is provided by

The objective of corporate governance reform should be what?

The agency problem refers to the possible conflicts of interest between

The Sarbanes-Oxley Act of 2002

The Cadbury Code of Best Practice

Outside the United States and the United Kingdom,

The key strengths of the public corporation is/are

Benetton, an Italian clothier, is listed on the New York Stock Exchange.

The cost of compliance with the Sarbanes-Oxley Act

Globalization and the Multinational Firm

International Monetary System

Balance of Payments

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

Filters