Chapter 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

Honest Tea and its management team demonstrate what type of responsibility? a. economic responsibility

Social responsibility

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

Seth Goldman, Honest Tea's Co-Founder and CEO, wakes up excited every day since he believes his company is producing healthier products than most and that their products are __________________

Sustainably produced

Honest Tea is a socially responsible company and must also ask: "To whom are we responsible?" A corporation's _________________ environment includes a large number of groups with interest in a business organization's activities, which are referred to as stakeholders

Task

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.

It is obvious that Honest Tea feels an obligation to its stakeholders. One of the questions they may have to answer is: "Which group's interests should have priority?" To answer this question they may need to craft a(n)_______________________.

enterprise strategy

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

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

Honest Tea is socially responsible as well as financially sound and profitable. This most closely conforms to the observations of which of the following?

the in-depth of analysis by Margolis and Walsh

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

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

Research indicates that boards with equity ownership use​ ________ to evaluate the CEO.

​quantifiable, verifiable criteria