Business and Society Ch 13

in 2008 and early 2009, share values declined sharply as the global economy fell into a severe recession. This type of stock market is referred to as a: None of the answers are correct. Bull market. Bear market. Volatile market.

Bear market.

Which of the following is true about corporate boards? Corporate boards average 12 members. Only one-third of all companies have at least one woman on their board. About half of the directors "outside" directors. About 13% of board members are Latino.

Corporate boards average 12 members.

Shareholders must rely exclusively on the Board of Directors to protect their interests. True False

False

The activism of institutional shareholders has often worsened company performance. True False

False

How are directors (members of corporate boards) selected? The nominating committee elects the directors. Shareholders with the greatest proportional ownership of the corporation become directors. The company's CEO appoints the directors. Shareholders elect the directors from the list of candidates.

Shareholders elect the directors from the list of candidates.

Which of the following is not a legal right of shareholders? To vote on changes in the corporate charter. To vote on who will become chief executive officer (CEO). To vote on major mergers and acquisitions. To vote on members for the Board of Directors.

To vote on who will become chief executive officer (CEO).

It is the responsibility of the Board of Directors and its audit committee to engage an independent accounting firm to audit the financial statements prepared by management. True False

True

Shareholders have become an increasingly powerful and vocal stakeholder group in corporations. True False

True

The Organization for Economic Cooperation and Development (OECD) representing 34 nations, issued a revised set of principles of corporate governance to serve as the benchmark for companies and policymakers worldwide. True False

True

The two main types of investors that own shares of stock in United States corporations are individuals and institutions. True False

True

Institutional investors have little incentive to hold their shares and organized to change management policy. True False

False

Which of the following is not true about institutional investors? Pension funds and university endowments are examples of institutional investors. Institutions account for 63% of the value of all equities owned in the United States in 2010. Institutions invest their funds by purchasing shares of stock in corporations. The proportion of institutional ownership of stock in the United States has declined slowly since the 1960s.

The proportion of institutional ownership of stock in the United States has declined slowly since the 1960s.

Which of the following statements is not true about shareholders? They are investors in the company. They own equal shares of company assets. Managers pay close attention to their needs and interests. They are the legal owners of business corporations.

They own equal shares of company assets.