Bus 202 ch 4

Which of the following is true regarding the problems that arose after separation of ownership from control? a. Agency problems developed when the interests of the shareholders were not aligned with the interests of the managers. b. Authority, power, and control were removed from the hands of the shareholders. c. Shareholders started perceiving themselves as owners rather than investors. d. The corporation functioned according to its designed plan with effective authority, power, and control flowing upward from the owners.

a. Agency problems developed when the interests of the shareholders were not aligned with the interests of the managers.

When the recipient of a stock option is given the option of buying stock at yesterday's price, resulting in an immediate and guaranteed wealth increase, _______ has occurred. a. backdating b. bullet-dodging c. shuttling d. spring-loading

a. backdating

_____ provisions are compensation recovery mechanisms that enable a company to recoup compensation funds, typically in the event of a financial restatement or executive's misbehavior. a. Bullet-dodging b. Clawback c. Golden parachute d. Poison pill

b. Clawback

A _____ is intended to discourage or prevent a hostile takeover. a. golden parachute b. poison pill c. ponzi scheme d. proxy vote

b. poison pill

The Accounting Reform and Investor Protection Act of 2002 is also known as the: a. Glass-Steagall Act b. Gramm-Leach-Bliley Act c. Sarbanes-Oxley Act d. Securities Act

c. Sarbanes-Oxley Act

_____ provides shareholders with the opportunity to propose nominees for the board of directors. a. Classified board b. Golden parachute c. Poison pill d. Proxy access

d. Proxy access

Which movement arose from concerns over excessive executive compensation, and resulted in a compensation report to be put to a shareholder vote at each annual meeting? a. Clawback b. Golden parachute c. Pay as You Go d. Say on Pay

d. Say on Pay

The granting of a stock option at today's price with the inside knowledge that something good is about to happen that will improve the stock's value is known as_____. a. backdating b. bullet-dodging c. shuttling d. spring-loading

d. spring-loading

Which of the following is true regarding legitimacy and corporate governance? a. Legitimacy is a condition that prevails when there is congruence between the organization's activities and society's expectations. b. Legitimation is a static process by which business seeks to perpetuate its acceptance. c. The micro level of legitimacy refers to the corporate system. d. The macro level of legitimacy refers to individual firms achieving and maintaining legitimacy by confirming to societal expectations.

a. Legitimacy is a condition that prevails when there is congruence between the organization's activities and society's expectations.

The four major groups involved in corporate governance are the: a. shareholders, boards of directors, managers, and employees b. shareholders, customers, managers, and employees c. employees, customers, managers, and suppliers d. investors, boards of directors, customers, and employees

a. shareholders, boards of directors, managers, and employees