Global Corporate Citizenship Test Questions Chapter 13 Shareholder Rights and Corporate Government
Which of the following is a key feature of effective boards of directors? A. Hold regular meetings without the CEO present. B. Fill all important positions on the board with managers with insider knowledge of the firm. C. Combine the duties of the board chairman and the chief executive. D. Ensure that no outside members are included on the board.
A. Hold regular meetings without the CEO present.
The mission of the Securities and Exchange Commission (SEC) is to: A. Protect shareholders' rights by making sure that stock markets are run fairly. B. Protect companies from hostile takeovers. C. Ensure that institutional investors do not take control of company management. D. Ensure that the federal treasury receives its share of the revenues from stock trading.
A. Protect shareholders' rights by making sure that the stock markets are run fairly
*This law tightened regulation on issuers of complex securities, especially those related to subprime mortgages: A. Sarbanes-Oxley Act. B. Dodd-Frank Act. C. Affordable Care Act. D. Securities and Exchange Act.
B. Dodd-Frank Act
Corporate governance involves the exercise of control over a company's: A. Finance and accounting departments. B. Entire corporate direction. C. Manufacturing facilities. D. Marketing and human resources departments.
B. Entire corporate direction
Which of the following is not true about institutional investors? A. Institutions invest their funds by purchasing shares of stock in corporations. B. The proportion of institutional ownership of stock in the U.S. has declined slowly since the 1960s. C. Pension funds and university endowments are examples of institutional investors. D. Institutions accounted for 63 percent of the value of all equities owned in the U.S. in 2010.
B. The proportion of the institutional ownership of stock in the U.S. has declined slowly since the 1960s.
Which of the following statements is not true about shareholders? A. They are the legal owners of business corporations. B. They own equal shares of company assets. C. They are investors in the company. D. Managers pay close attention to their needs and interests.
B. They own equal shares of the company assets
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: A. Bull market. B. Volatile market. C. Bear market. D. None of the above
C. Bear Market
The "agency problem" arises when: A. Owners manage the company on their own behalf. B. There is no separation of ownership and control in a company. C. Managers act in their own interest, rather than in the interest of shareholders. D. Shareholders act in their own interest, rather than in the interest of the board.
C. Managers act in their own interest, instead of the interest of the shareholders.
Which of the following is not a legal right of shareholders? A. To vote on members for the board of directors. B. To vote on major mergers and acquisitions. C. To vote on changes in the corporate charter and proposals. D. To vote on who will become chief executive officer (CEO).
D. To vote on who will become chief executive officer (CEO).