Chapter 5 GEB 3434 Study Guide
By merging the roles of the chief executive officer and the chairperson of the board of an organization, the oversight provided by the board of directors is magnified.
False
Corporate governance does not impact the efficiency of financial markets.
False
Corporate transparency is concerned with how well an organization meets its obligations to its stakeholders.
False
Creditors, suppliers, and professional consultants represent the inside members of a board of directors
False
Creditors, suppliers, and professional consultants represent the inside members of a board of directors.
False
Management consulting is the system by which business organizations are directed and controlled
False
Members of a board of directors are not eligible to be a part of the audit committee of an organization.
False
The "comply or else" guideline gave companies the flexibility to comply with governance standards or explain their noncompliance in their corporate documents.
False
The Cadbury report on corporate governance focused on internal governance. The "comply or explain" guideline gave companies the flexibility to comply with governance standards or explain their noncompliance in their corporate documents.
False
The Cadbury report, established by Sir Adrian Cadbury in 1992 to address financial aspects of corporate governance, argued for a guideline of "comply or else," which required companies to abide by a set of operating standards or face stiff financial penalties.
False
The Cadbury report, established by Sir Adrian Cadbury in 1992 to address financial aspects of corporate governance, dealt exclusively with external governance
False
The Cadbury report, established by Sir Adrian Cadbury in 1992 to address financial aspects of corporate governance, dealt exclusively with external governance.
False
The King I report, established by Mervyn King in 1994, failed to recognize the involvement of all the corporation's stakeholders in the efficient and appropriate operation of an organization
False
The King II report emphasized the need for companies to adopt an exclusive approach to corporate governance instead of an inclusive one.
False
The board of directors of an organization can secure its independence by permitting one individual to function as both the chief executive officer of the organization and the chairperson of its board.
False
The main responsibility of the auditing committee of an organization is to set the compensation for all the employees of the organization, including its outside contractors.
False
The strategic business unit of an organization is responsible for monitoring the financial policies and procedures of the organization.
False
Typically, the compensation package of a CEO and other senior executives of an organization consists of a base salary and stock options but does not include any performance bonus or other perks.
False
By merging the roles of the chief executive officer and the chairperson of the board of an organization, the oversight provided by the board of directors is lost.
True
By permitting one individual to function as both the chief executive officer of a company and the chairperson of its board, the board is given the benefit of leadership from someone who is in touch with the inner workings of the organization.
True
By permitting one individual to function as both the chief executive officer of an organization and the chairperson of its board, the independence of the board is compromised.
True
Corporate governance is concerned with how well an organization meets its obligations to its stakeholders.
True
Corporate governance is the system by which business organizations are directed and controlled.
True
Ethical misconduct is possible even if a board of directors passes all the criteria established by Walter Salmon.
True
If the board of directors is to serve its purpose in setting the operational tone for an organization, it should be comprised of members who represent professional conduct in their own organizations
True
Independent or outside directors are not eligible to be a part of the compensation committee of an organization
True
Independent or outside directors are not eligible to be a part of the compensation committee of an organization.
True
Independent or outside directors are not eligible to be a part of the compensation committee of an organization. Independent or outside directors are not eligible to be a part of the compensation committee of an organization
True
Running a company of any size requires constant evaluation of risk-versus-reward scenarios.
True
Studies show that a commitment to good corporate governance makes a company both more attractive to investors and lenders and more profitable.
True
The "comply or explain" guideline gave companies the flexibility to comply with governance standards or explain their noncompliance in their corporate documents.
True
The CRAFTED principles of governance, offered by the European business school INSEAD, recommend creating a culture and climate of consistency in an organization.
True
The Cadbury report on corporate governance focused on internal governance
True
The Cadbury report on corporate governance focused on internal governance.
True
The King I report recognized the involvement of all the corporation's stakeholders—the shareholders, customers, employees, vendor partners, and the community in which the corporation operates—in the efficient and appropriate operation of an organization
True
The King Report on Corporate Governance of 1994 incorporated a code of corporate practices and conduct that looked beyond the corporation itself, taking into account its impact on the larger community
True
The Sarbanes-Oxley Act of 2002 incorporates the "comply or else" approach to corporate governance
True
The audit committee of an organization is responsible for monitoring the financial policies and procedures of the organization.
True
The audit committee of an organization is staffed by members of the board of directors plus independent or outside directors.
True
The board members of a company are not accountable to the company and its shareholders.
True
The compensation committee of an organization is responsible for setting the compensation for the CEO and other senior executives. Compensation policies for the employees of the corporation are left to the management team to oversee
True
The corporate governance committee of a company oversees compliance with its internal code of ethics as well as any federal and state regulations on corporate conduct
True
The corporate governance committee of a company oversees compliance with its internal code of ethics as well as any federal and state regulations on corporate conduct.
True
The ethical conduct of a business can be influenced by the individual personalities involved.
True
The inside members of a board of directors hold management positions in a company. Outside members may have direct connections to the company as creditors, suppliers, customers, or professional consultants.
True
The main responsibility of the auditing committee of an organization is to set the compensation for all the employees of the organization, including its outside contractors.
True
The stakeholders of a company include its customers, its vendor partners, state and local entities, and the community in which it conducts its business operations.
True
The triple bottom line proposed by the King II report, released by the committee formed by Mervyn King, recognizes the economic, environmental, and social aspects of a company's activities
True
Typically, the compensation package of a CEO and other senior executives of an organization consists of a base salary, stock options, performance bonus, and other perks.
True
