Exam Prep Chapter.6 Shareholders And Business Ethics

Type: fill-in-blank

Title: Chapter 06 - Question 01

01) Please complete the following definition (two missing words): ___________describes the rules, processes and structures through which corporations are directed and controlled in the interests of shareholders and other stakeholders’.

Page reference: p.237

a. Corporate governance

Type: multiple choice question

Title: Chapter 06 - Question 02

02) According to Shankman (1999), two features make agency relations special. One of these is the inherent conflict of interest between shareholders and managers. What is the other?

a. Short-term focus of the ownership goals.

b. Limited communication between owners and managers.

c. Large differences in defined rights and obligations.

d. Informational asymmetry between principal and agent.

Type: matching question

Title: Chapter 06 - Question 03

03) Correctly complete the comparison of corporate governance regimes globally, with respect to ownership identity.

Page reference: 239-240

a. Anglo-American model = Individuals, pensions and mutual funds

b. Rhenish capitalism = Banks, corporations, state

c. India = Families, foreign investors, banks

d. China = State, families, corporations

Type: multiple choice question

Title: Chapter 06 - Question 04

04) There are numerous ethical issues around executive pay. Which of these do Crane et al identify as a reason that executive pay touches an ethical chord with the public in many countries?

a. The pay differentials between those at the top and those at the bottom appear to be highly inequitable.

b. It is difficult to design appropriate performance-related pay.

c. Shifts in remuneration show the influence of globalization on executive pay.

d. The influence of the board is limited, often failing to reflect shareholder (or other stakeholder) interests.

Type: multiple choice question

Title: Chapter 06 - Question 05

05) Ballwieser and Clemm (1999) identify five main problematic aspects of the financial intermediary’s job. Which of the following is not one of them?

a. Conflict of interest.

b. Ratings are frequently unreliable.

c. The size of the financial intermediary firms threaten standards.

d. Long-term relationships with clients can threaten independence.

Type: multiple response question

Title: Chapter 06 - Question 06

06) The _______ in a company plays a key role in managing the _______ relationship, as it appoints the CEO, determines their salary and holds their ________ to account.

a Board of directors, Principal-agent, Performance

b CEO, Principal-agent, Performance

c Board of directors, Inter-shareholder, Performance

d CEO, Inter-shareholder, Performance

Type: fill-in-blank

Title: Chapter 06 - Question 07

07) An investment decision that combines the search for financial returns with the achievement of social, ethical, and environmental goals is known as __________

Page reference: p.264-267

a. Socially responsible investment

Type: multiple choice question

Title: Chapter 06 - Question 08

08) Mackenzie (1998) identifies two types of SRI funds. Market-led funds choose the firms to invest in following the indication of the market. Deliberative funds, meanwhile, base their portfolio decisions on:

a. Their ability to engage in dialogue with companies.

b. Their own ethical criteria.

c. Data from research agencies.

d. A range of negative criteria.

Type: true-false

Title: Chapter 06 - Question 09

09) In the Anglo-American and Asian context, the board of directors typically has two-tiers, while in continental Europe a single tier board is the norm. True or false?

True

a. False

False

b. True

Type: true-false

Title: Chapter 06 - Question 10

10) Cooperatives are owned and run by their managers. True or false?

a. True

b. False

Type: true-false

Title: Chapter 06 - Question 11

11) Three ethical issues associated with executive pay in firm-shareholder relations are: the issue of designing appropriate performance related pay, the influence of globalization on executive pay and the limited influence of the board in ensuring shareholder interests are championed.

a. True

The means by which performance related pay can be designed to ensure shareholder value is maximised; globalisation and international talent competition driving up CEO pay globally; and the limited power and influence of the board to ensure shareholders interest and value and maximised are all issues associated with executive pay in firm-shareholder relations.

b. False

The means by which performance related pay can be designed to ensure shareholder value is maximised; globalisation and international talent competition driving up CEO pay globally; and the limited power and influence of the board to ensure shareholders interest and value and maximised are all issues associated with executive pay in firm-shareholder relations.

Type: multiple choice question

Title: Chapter 06 - Question 12

12) According to Crane et al, which of the following is NOT an alternative form of ownership of corporations?

incorrect

a. State-owned firms

b. Co-operatives

c. Social purpose corporations

correct

d. Limited Liability Corporations

Type: multiple response question

Title: Chapter 06 - Question 13

13) _______ such as Fitch Ratings, and ________ such as Deloitte are charged with providing a _______ and fair representation of the financial position of a large firm.

a. Credit rating agencies, Accounting firms, True

b. Banks, Accounting firms, True

c. Accounting firms, Banks, Partial

d. Credit rating agencies, Hedge funds, Partial

Type: multiple response question

Title: Chapter 06 - Question 14

14) Crane et al. discuss steps that can be taken to make supervisory, non-executive, board members more independent. Choose all that apply.

a. Non-executive board members should be appointed independently.

b. Non-executive board members should be drawn from outside the company.

c. Non-executive board members should be appointed for a limited time.

d. Board members should have executive experience in the industry.

Type: fill-in-blank

Title: Chapter 06 - Question 15

15) The breadth in skills, backgrounds, age, gender, ethnicity and sexual orientation possessed by the non-executive and executive directors of a company is often referred to as?

Page reference: p.244

a. Board diversity