mgmt ch 2
All of the following are considered successful transformational leaders EXCEPT ________.
Bernie Madoff
The term corporate governance refers to the relationship among which of the following groups in determining the direction and performance of the corporation?
Board of Directors, top management, stakeholders.
________ refers to the relationship among groups in determining the direction and performance of the corporation.
Corporate governance
More than half of all publicly traded companies in the United States are incorporated in the state of ________.
Delaware
________ is the directing of activities toward the accomplishment of corporate objectives, and it sets the tone for the entire corporation.
Executive leadership
Of the following, which is NOT a responsibility of a board of directors?
General succession planning and human resource responsibilities
In a research study, investors indicated they are willing to pay more for a corporation's stock because of certain reasons. Of the following, which is NOT a primary reason they would pay more?
Good governance automatically reduces accounting and auditing costs.
Which of the following is NOT necessarily a BENEFIT of the implementation of Sarbanes-Oxley?
If an individual, group, another company own more than 50% of the voting shares, they become exempt from certain NYSE and NASDAQ requirements
Which of the following is the Japanese term used for a set of companies with interlocking business relationships and shareholdings?
Keiretsu
________ refers to the situation where it is difficult or expensive for the owners to verify what the agents are actually doing.
Moral hazard
Similar to the New York Stock Exchange, ________ rules require that nominations for new directors be made by either a nominating committee of independent outsiders or by a majority of independent outside directors.
NASDAQ
Which of the following is NOT a provision of the Sarbanes-Oxley Act?
Permits stock options and grants to be post-dated.
The U.S. Securities and Exchange Commission (SEC) requires that mutual funds publicly disclose the proxy votes cast at company board meetings in its portfolio. Which of the following choices describes the benefit of this action?
Reduction in rubberstamping management proposals
In response to the many corporate scandals uncovered since 2000, the U.S. Congress passed the ________ in June 2002 to protect shareholders from the excesses and failed oversight that characterized criminal activities at many prominent firms.
Sarbanes-Oxley Act
All of the following statements are true about outside directors EXCEPT ________.
There is clear evidence indicating that a high proportion of outsiders on a board results in improved financial performance
________ provide(s) change and movement in an organization by providing a vision for change, and they command respect and execute effective strategy formulation and implementation.
Transformational leaders
All of the following are viable methods individuals and groups use to help investors evaluate a firm's corporate governance EXCEPT ________.
Wikipedia
The SEC required that all listed companies staff their audit, compensation, and nominating/corporate governance committees entirely with independent, outside members. This view is in agreement with ________________________ theory.
agency
The ________ theory states that problems arise in corporations because the agents (top management) are not willing to bear responsibility for their decisions unless they own a substantial amount of stock in the corporation.
agency
A(n) ________ arises when the desires or objectives of the owners and the agents conflict.
conflict of interest
Although neither the composition of boards nor the board leadership structure has been consistently linked to firm financial performance, better governance ___________________.
does lead to higher credit ratings and stock prices.
Strategic management involves ________ in the organization
everyone
All of the following statements are true about the Board of Directors EXCEPT ________.
in a legal sense, the board of directors is required to manage the affairs of the corporation
A(n) ________ occurs when two corporations have directors who also serve on the board of a third firm, such as a bank.
indirect interlock
The boards of most publicly owned corporations are composed of both inside and outside directors. People who favor a high proportion of outsiders state that outside directors are _________________.
less biased and more likely to evaluate management's performance objectively than are inside directors.
When compensation committee members are significant shareholders, they tend to offer the CEO ________ but with a higher incentive component than do compensation committee members who own little to no stock.
less salary
Based on the degree of involvement in strategic management the most passive boards are referred to as ____________________.
phantom
Research indicates that boards with equity ownership use ________ to evaluate the CEO.
quantifiable, verifiable criteria
Which of the following most accurately describes what the company is capable of becoming, and is often communicated in the company's vision statement?
strategic vision
The board of directors is responsible for all of the following tasks and responsibilities EXCEPT ________.
succession planning for the board but not for top management
All of the following are true about top management responsibilities EXCEPT ________.
tasks are typically divided among the lower-level employees
All of the following statements are true about agency theory EXCEPT ________.
the agency theory proposes that, because of their long tenure with the corporation, insiders tend to identify with the corporation and its success
Recall that many of those who prefer that the Chairman and CEO positions be combined agree that the outside directors should elect a lead director. All of the following are correct statements about the lead director EXCEPT ________.
the lead director becomes less important because only a small percentage of U.S. boards held regular executive sessions without the CEO being present
All of the following are true statements about inside directors EXCEPT ________.
there is a trend in the United States to increase the number of inside directors
Successful CEOs are noted for having a clear strategic vision, a strong passion for their company, an ability to communicate with others and have many characteristics of _______________________________ leaders.
transformational