Question 1

In many countries outside the United States,the central conflict is not between managers and shareholders,but instead between ________ and ________.

Accepted Answer

A)  managers,regulators
B)  the board of directors,shareholders
C)  controlling shareholders,minority shareholders
D)  insiders,outsiders
E)  managers,the board of directorsF) None of the above
G) B) and D)

Question 2

What are some of the negative effects of increasing the sensitivity of managerial pay to firm performance?

Accepted Answer

Increasing the pay-for-performance sensi...

Question 3

The Smith family has a 45% stake in A company and A company has a 75% stake in B company.Finally,B company has a 35% stake in C company.What percentage ownership does the Smith family have in C company?

Accepted Answer

A)  21%
B)  12%
C)  34%
D)  26%
E)  16%F) B) and E)
G) A) and E)

Question 4

________ is a person making a trade based on privileged information.

Accepted Answer

A)  Rogue trading
B)  Illegal trading
C)  Standard trading
D)  Insider trading
E)  Exchange tradingF) A) and C)
G) C) and E)

Question 5

Activist investors can only achieve their goals by putting their issues to a shareholder vote.

Accepted Answer

A) True 
 B)False  False

Question 6

Academic studies have shown that greater managerial ownership is associated with greater value-reducing actions by managers.

Accepted Answer

A) True 
 B)False

Question 7

Having a founder and top executive also be a major shareholder:

Accepted Answer

A)  always results in agency conflicts that are bad for minority shareholders.
B)  can sometimes,as in the case of Google,have benefits that outweigh the costs.
C)  is illegal in Canada and most other industrialized countries.
D)  is never beneficial to employees.
E)  inevitably leads to insider trading.F) A) and B)
G) B) and D) B

Question 8

How do securities analysts provide outside monitoring of a corporation?

Accepted Answer

Since analysts collect extensive informa...

Question 9

Which of the following is an example of an agency problem?

Accepted Answer

A)  managers not working as diligently if they are not the sole owner of the business
B)  the board of directors firing an incompetent manager
C)  the manager owning a great deal of stock in the company
D)  a corporate raider attempting to purchase the company
E)  managers using cash to increase dividendsF) B) and D)
G) B) and E)

Question 10

Which monitors of a firm,other than the board of directors,become experts in the firm and are in a position to detect irregularities first?

Accepted Answer

A)  securities analysts
B)  lenders
C)  employees
D)  regulators
E)  shareholdersF) B) and E)
G) B) and D)

Question 11

What are the main provisions of the DODD Frank Act?

Accepted Answer

1.Independent Compensation Committees: T...

Question 12

Tammy is a member of the Board of Directors of Moon Corporation.Her husband is the manager of a large division.What type of director is Tammy?

Accepted Answer

A)  inside director
B)  outside director
C)  grey director
D)  resident director
E)  unelected directorF) A) and C)
G) C) and D)

Question 13

What is backdating?

Accepted Answer

Backdating is the practice of choosing the grant date of a stock option retroactively so that the date of the grant would coincide with a date when the stock price was lower than its price at the time the grant was actually awarded.

Question 14

The optimal level of sensitivity of a manager's compensation to the firm's performance depends on the manager's level of risk aversion.

Accepted Answer

A) True 
 B)False

Question 15

Describe the main requirements of the Sarbanes-Oxley Act of 2002.

Accepted Answer

1.Strict limits are set on the amount of...

Question 16

What is the role of takeovers in corporate governance?

Accepted Answer

When internal governance systems such as...

Question 17

Describe the "stakeholder" model of corporate governance.

Accepted Answer

The agency costs and the ways to control...

Question 18

The relationship between managerial ownership and firm value is unlikely to be the same for every firm,or even for different executives of the same firm.

Accepted Answer

A) True 
 B)False

Question 19

The most extreme form of direct action that shareholders can take is:

Accepted Answer

A)  a resolution.
B)  to privately approach the board.
C)  a "no" vote.
D)  a proxy contest.
E)  a "say-on-pay" vote.F) A) and E)
G) A) and D)

Question 20

Examples of cross-holdings include: I.Japanese keiretsu

Accepted Answer

A)  I,II,and IV
B)  I,II,and III
C)  I and IV
D)  I,II,III,and IV
E)  II and IIIF) A) and C)
G) C) and D)

Exam 25: Corporate Governance

In many countries outside the United States,the central conflict is not between managers and shareholders,but instead between ________ and ________.

Correct AnswerverifiedShow Answer

What are some of the negative effects of increasing the sensitivity of managerial pay to firm performance?

Correct AnswerverifiedIncreasing the pay-for-performance sensi...View AnswerShow Answer

The Smith family has a 45% stake in A company and A company has a 75% stake in B company.Finally,B company has a 35% stake in C company.What percentage ownership does the Smith family have in C company?

Correct AnswerverifiedShow Answer

________ is a person making a trade based on privileged information.

Correct AnswerverifiedShow Answer

Activist investors can only achieve their goals by putting their issues to a shareholder vote.

Correct AnswerverifiedFalse

Academic studies have shown that greater managerial ownership is associated with greater value-reducing actions by managers.

Correct AnswerverifiedShow Answer

Having a founder and top executive also be a major shareholder:

Correct AnswerverifiedB

How do securities analysts provide outside monitoring of a corporation?

Correct AnswerverifiedSince analysts collect extensive informa...View AnswerShow Answer

Which of the following is an example of an agency problem?

Correct AnswerverifiedShow Answer

Which monitors of a firm,other than the board of directors,become experts in the firm and are in a position to detect irregularities first?

Correct AnswerverifiedShow Answer

What are the main provisions of the DODD Frank Act?

Correct Answerverified1.Independent Compensation Committees: T...View AnswerShow Answer

Tammy is a member of the Board of Directors of Moon Corporation.Her husband is the manager of a large division.What type of director is Tammy?

Correct AnswerverifiedShow Answer

What is backdating?

Correct AnswerverifiedBackdating is the practice of choosing the grant date of a stock option retroactively so that the date of the grant would coincide with a date when the stock price was lower than its price at the time the grant was actually awarded.

The optimal level of sensitivity of a manager's compensation to the firm's performance depends on the manager's level of risk aversion.

Correct AnswerverifiedShow Answer

Describe the main requirements of the Sarbanes-Oxley Act of 2002.

Correct Answerverified1.Strict limits are set on the amount of...View AnswerShow Answer

What is the role of takeovers in corporate governance?

Correct AnswerverifiedWhen internal governance systems such as...View AnswerShow Answer

Describe the "stakeholder" model of corporate governance.

Correct AnswerverifiedThe agency costs and the ways to control...View AnswerShow Answer

The relationship between managerial ownership and firm value is unlikely to be the same for every firm,or even for different executives of the same firm.

Correct AnswerverifiedShow Answer

The most extreme form of direct action that shareholders can take is:

Correct AnswerverifiedShow Answer

Examples of cross-holdings include: I.Japanese keiretsu

Correct AnswerverifiedShow Answer

In many countries outside the United States,the central conflict is not between managers and shareholders,but instead between and .

Correct Answer
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Increasing the pay-for-performance sensi...
View Answer

Correct Answer
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False

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B

Correct Answer
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Since analysts collect extensive informa...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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1.Independent Compensation Committees: T...
View Answer

Correct Answer
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Correct Answer
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Backdating is the practice of choosing the grant date of a stock option retroactively so that the date of the grant would coincide with a date when the stock price was lower than its price at the time the grant was actually awarded.

Correct Answer
verified

Correct Answer
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1.Strict limits are set on the amount of...
View Answer

Correct Answer
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When internal governance systems such as...
View Answer

Correct Answer
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The agency costs and the ways to control...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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