Quiz 10-Corporate Governance
Which of the following is NOT true about external corporate governance mechanisms?
Industry analysts and rating agencies work as fully independent parties and governance devices.
Which of the following is NOT true about executive compensation?
It has found to be a highly effective governance mechanism for resolving the agency problem.
Which of the following is NOT true about corporate governance?
Stewardship theory shares agency theory's economic assumption that managers are self-interested and are inclined to behave opportunistically.
Which of the following is NOT a mechanism to improve corporate governance?
Takeover defense provisions
Which of the following is NOT true about the principal-agent relationship?
The agent (manager) is assumed to act in the best interest of owners since owners have complete control over potential misbehavior.
Which of the following is TRUE about the board of directors?
The board's responsibilities include providing strategic advice to the top management team, hiring the CEO, and representing shareholder interests.
Which of the following is NOT a good argument for dispersed ownership of corporations?
a larger collection of shareholders is likely to do a better job monitoring the firm's activities
Which of the following might be benefits from (Rule 404 of) the Sarbanes-Oxley Act?
better information for shareholders from increased public scrutiny of top managers and directors