Business Society Quiz 4

The directors of a company are a central factor in corporate governance because they:

Exercise formal legal authority over company policy.

An argument in support of high executive compensation is:

High salaries provide an incentive for innovation and risk-taking.

One of the main reasons that American executives are paid so much is:

Pay is set by the compensation committees of the board, largely comprised of other CEOs who have an interest in pushing compensation up.

Which of the following statements is not true about shareholders?

They own equal shares of company assets.

A legal right of shareholders is

To vote on members for the board of directors.

Investors may receive an economic benefit from the ownership of stock by receiving:

Both dividends and capital gains.

The board committee that administers and approves salaries and benefits of high-level managers in a company is called:

Compensation

Which of the following is an example of fulfilling social objectives through stock ownership?

Divesting from Chinese companies that made products using forced labor. Investing in Burmese companies that had been accused of human rights abuses.

An argument that opposes the idea of high executive pay is:

High salaries divert resources that could be used to invest in the business.

Which of the following is a key feature of effective boards of directors?

Hold regular meetings without the CEO present.