MGT 313 - Chapter 13

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

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

Composed entirely of outside directors Financially literate

Which of the following is true about corporate boards?

Corporate boards average 12 members.

The activism of institutional shareholders has often worsened company performance.

False

The ratio of average executives to average worker pay tends to increase during recessions and gall during periods of economic expansion

False

Which of the following is true about institutional investors?

Institutions invest their funds by purchasing share of stock in corporations Pension funds and university endowments are examples of institutional investors Institutions accounted for 63 percent of the value of all equities owned in the U.S. in 2010.

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

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

Since the 1960s, growth in the numbers of institutional investors in the United States has been phenomenal

True

Stock options represent the right to buy a company's stock at a set price for a certain period.

True

The Organization for Economic Cooperation and Development (OECD), representing 34 nations, issued a revised set of principles of corporate governance to serve as a benchmark for companies and policymakers

True