Ch 13 Social Responsibility

An argument in support of high executive compensation is:

High salaries provide an incentive for innovation and risk-taking.

One of the main reasons that American executives are paid so much is:

Pay is set by the compensation committees of the board, largely comprised of other CEOs who have an interest in pushing compensation up.

An example of "insider trading" is:

A company executive passing nonpublic information about an upcoming acquisition to a friend, who traded for a profit.

A legal right of shareholders is:

To vote on who will be on the board of directors

In 2017, median compensation for directors at the largest U.S. corporations was around:

$300,000.

Which of the following is not a function of board committees?

The finance committee works closely with the human resources department to fund employee salaries.

Which of the following statements is not true about shareholders?

They own equal shares of company assets.

The activism of institutional investors in other countries has been spearheaded by:

U.S.-based pension and mutual funds that in recent years acquired large stakes in foreign countries.

Institutional investors are sometimes referred to as:

Wall Street investors.

The Securities and Exchange Commission outlaws:

Any manipulative or deceptive device used to trade stocks

The audit committee is required by U.S. law to be:

Both composed entirely of outside and headed by the company's CEO.

Investors may receive an economic benefit from the ownership of stock by receiving:

Both dividends and capital gains.

Which of the following is true about corporate boards?

Corporate boards average between 9 and 11 members.

Which of the following is an example of fulfilling social objectives through stock ownership?

Divesting from Chinese companies that made products using forced labor.

Which of the following is a key feature of effective boards of directors?

Hold regular meetings without the CEO present.

Institutional investors are best described by which statement?

Institutions invest their funds by purchasing shares of stock in corporations on behalf of their investors or members.

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

Bear market.

Corporate governance involves the exercise of control over a company's:

Entire corporate direction.

The directors of a company are a central factor in corporate governance because they:

Exercise formal legal authority over company policy.

The company justified Wynn's high compensation package, in the discussion case Executive Misconduct at Wynn Resorts, by saying that:

He had led the company to total returns of 19 percent per year between 2002 and 2017.

Supporters of declassifying board elections argue that this approach:

Increases accountability and responsiveness to shareholders.

In 2014, of the following nations, the fastest-growing stock market was in:

India.

Social investors seek to eliminate from their investment portfolios companies that:

Pollute the environment. Discriminate against employees. Make dangerous products like tobacco or weapons.

How are directors (members of corporate boards) selected?

Shareholders elect the directors from a list of candidates.

Reports filed with the SEC provide information on a company's:

Sales and earnings. Depreciation by line of business. Details of foreign operations.