Question 1

Academic studies have supported the notion that ________ managerial ownership is associated with ________ value-reducing actions by managers.

Accepted Answer

A)  greater; fewer 
B)  greater; more 
C)  less; fewer 
D)  less; more 
A)  greater; fewer 
B)  greater; more 
C)  less; fewer 
D)  less; more

Question 2

The Dodd-Frank 2010 provides new regulations to strengthen corporate governance. Which of the following is NOT a regulation under this Act?

Accepted Answer

A)  At least once every three years, firms must provide shareholders the right to vote on the compensation of the firm's highest paid executives. The results of this vote are binding on the firm's board of directors. 
B)  All US Exchanges must require that listed firms have compensation committees made up exclusively of independent board members. 
C)  Large continuous shareholders may nominate candidates for the board of directors and the candidates must be included in the firm's proxy statement. 
D)  Firms must establish policies to claw back performance pay in the event that an accounting restatement indicates that such payments were not justified. 
A)  At least once every three years, firms must provide shareholders the right to vote on the compensation of the firm's highest paid executives. The results of this vote are binding on the firm's board of directors. 
B)  All US Exchanges must require that listed firms have compensation committees made up exclusively of independent board members. 
C)  Large continuous shareholders may nominate candidates for the board of directors and the candidates must be included in the firm's proxy statement. 
D)  Firms must establish policies to claw back performance pay in the event that an accounting restatement indicates that such payments were not justified.

Question 3

Which of the following statements is false?

Accepted Answer

A)  In many other countries, the central conflict is between what are called "controlling shareholders" and "minority shareholders." 
B)  Controlling shareholders can make decisions that benefit them disproportionately relative to the minority shareholders, such as employing family members rather than the most talented managers or establishing contracts favourable to other family-controlled firms. 
C)  As recent events and corporate scandals have shown, investor protection in the United States is generally seen as substandard when compared to the developed economies in the world. 
D)  Much of the focus in the United States is on the agency conflict between shareholders, who own the majority of a firm but are a dispersed group, and managers, who own little of the firm and must be monitored. 
A)  In many other countries, the central conflict is between what are called "controlling shareholders" and "minority shareholders." 
B)  Controlling shareholders can make decisions that benefit them disproportionately relative to the minority shareholders, such as employing family members rather than the most talented managers or establishing contracts favourable to other family-controlled firms. 
C)  As recent events and corporate scandals have shown, investor protection in the United States is generally seen as substandard when compared to the developed economies in the world. 
D)  Much of the focus in the United States is on the agency conflict between shareholders, who own the majority of a firm but are a dispersed group, and managers, who own little of the firm and must be monitored.

Question 4

Which of the following statements is false?

Accepted Answer

A)  A board is said to be classified when its monitoring duties have been compromised by connections or perceived loyalties to management. 
B)  Even the most active independent directors spend only one or two days per month on firm business, and many independent directors sit on multiple boards, further dividing their attention. 
C)  On a board composed of insider, gray, and independent directors, the role of the independent director is really that of a watchdog. 
D)  Because independent directors' personal wealth is likely to be less sensitive to performance than that of insider and gray directors, they have less incentive to closely monitor the firm. 
A)  A board is said to be classified when its monitoring duties have been compromised by connections or perceived loyalties to management. 
B)  Even the most active independent directors spend only one or two days per month on firm business, and many independent directors sit on multiple boards, further dividing their attention. 
C)  On a board composed of insider, gray, and independent directors, the role of the independent director is really that of a watchdog. 
D)  Because independent directors' personal wealth is likely to be less sensitive to performance than that of insider and gray directors, they have less incentive to closely monitor the firm.

Question 5

When the different stakeholders in a firm all have their own interests and the interests diverge,we may have ________.

Accepted Answer

A)  a governance issue 
B)  an effective issue 
C)  agent issues 
D)  an efficiency issue 
A)  a governance issue 
B)  an effective issue 
C)  agent issues 
D)  an efficiency issue

Question 6

Describe the main requirements of the Sarbanes-Oxley Act of 2002.

Accepted Answer

1.Strict limits on the amount of non-aud

Question 7

Directors who are employees,former employees,or family members of employees are called

Accepted Answer

A)  Managing Directors. 
B)  Independent Directors. 
C)  Inside Directors. 
D)  Gray Directors. 
A)  Managing Directors. 
B)  Independent Directors. 
C)  Inside Directors. 
D)  Gray Directors.

Question 8

By tying stock option compensation to performance,the shareholders effectively give the manager ________ in the firm.

Accepted Answer

A)  an ownership stake 
B)  an investment opportunity 
C)  a leadership opportunity 
D)  controlling power 
A)  an ownership stake 
B)  an investment opportunity 
C)  a leadership opportunity 
D)  controlling power

Question 9

Which of the following statements is false?

Accepted Answer

A)  Backdating refers to the practice of choosing the grant date of a stock option retroactively, so that the date of the grant would coincide with a date when the stock price was at its low for the quarter or for the year. 
B)  Unless it is reported in a timely manner to the Canadian Revenue Agency and to shareholders, and reflected in the firm's financial statements, backdating is illegal. 
C)  The use of backdating suggests that some executive stock option compensation may not truly have been earned as the result of good future performance of the firm. 
D)  By backdating the option the executive receives a stock option that is already out-of-the-money, with a strike price equal to the higher price on the supposed grant date. 
A)  Backdating refers to the practice of choosing the grant date of a stock option retroactively, so that the date of the grant would coincide with a date when the stock price was at its low for the quarter or for the year. 
B)  Unless it is reported in a timely manner to the Canadian Revenue Agency and to shareholders, and reflected in the firm's financial statements, backdating is illegal. 
C)  The use of backdating suggests that some executive stock option compensation may not truly have been earned as the result of good future performance of the firm. 
D)  By backdating the option the executive receives a stock option that is already out-of-the-money, with a strike price equal to the higher price on the supposed grant date.

Academic studies have supported the notion that managerial ownership is associated with value-reducing actions by managers.

The Dodd-Frank 2010 provides new regulations to strengthen corporate governance. Which of the following is NOT a regulation under this Act?

Which of the following statements is false?

Which of the following statements is false?

When the different stakeholders in a firm all have their own interests and the interests diverge,we may have ________.

Describe the main requirements of the Sarbanes-Oxley Act of 2002.

Directors who are employees,former employees,or family members of employees are called

By tying stock option compensation to performance,the shareholders effectively give the manager ________ in the firm.

Which of the following statements is false?

The Corporation

Introduction to Financial Statement Analysis

Arbitrage and Financial Decision Making

The Time Value of Money

Interest Rates

Valuing Bonds

Valuing Stocks

Investment Decision Rules

Fundamentals of Capital Budgeting

Capital Markets and the Pricing of Risk

Optimal Portfolio Choice and the Capital Asset Pricing Model

Estimating the Cost of Capital

Investor Behaviour and Capital Market Efficiency

Financial Options

Option Valuation

Real Options

Capital Structure in a Perfect Market

Debt and Taxes

Financial Distress, managerial Incentives, and Information

Payout Policy

Capital Budgeting and Valuation With Leverage

Valuation and Financial Modelling: a Case Study

The Mechanics of Raising Equity Capital

Debt Financing

Leasing

Working Capital Management

Short-Term Financial Planning

Mergers and Acquisitions

Risk Management

International Corporate Finance

Filters

Exam 29: Corporate Governance

Academic studies have supported the notion that ________ managerial ownership is associated with ________ value-reducing actions by managers.

The Dodd-Frank 2010 provides new regulations to strengthen corporate governance. Which of the following is NOT a regulation under this Act?

Which of the following statements is false?

Which of the following statements is false?

When the different stakeholders in a firm all have their own interests and the interests diverge,we may have ________.

Describe the main requirements of the Sarbanes-Oxley Act of 2002.

Directors who are employees,former employees,or family members of employees are called

By tying stock option compensation to performance,the shareholders effectively give the manager ________ in the firm.

Which of the following statements is false?

The Corporation

Introduction to Financial Statement Analysis

Arbitrage and Financial Decision Making

The Time Value of Money

Interest Rates

Valuing Bonds

Valuing Stocks

Investment Decision Rules

Fundamentals of Capital Budgeting

Capital Markets and the Pricing of Risk

Optimal Portfolio Choice and the Capital Asset Pricing Model

Estimating the Cost of Capital

Investor Behaviour and Capital Market Efficiency

Financial Options

Option Valuation

Real Options

Capital Structure in a Perfect Market

Debt and Taxes

Financial Distress, managerial Incentives, and Information

Payout Policy

Capital Budgeting and Valuation With Leverage

Valuation and Financial Modelling: a Case Study

The Mechanics of Raising Equity Capital

Debt Financing

Leasing

Working Capital Management

Short-Term Financial Planning

Mergers and Acquisitions

Risk Management

International Corporate Finance

Filters

Academic studies have supported the notion that managerial ownership is associated with value-reducing actions by managers.