question

The requirements of a board of directors vary significantly by country and by state; however, there is a developing consensus as to what the major responsibilities should be. Which of the following is NOT one of the responsibilities?

answer

becoming directly involved in managerial decisions

question

Society increasingly expects corporate boards to balance the economical goal of profitability with the social needs of society (T/F)

answer

true

question

Catalyst-level board of directors typically

answer

take leading roles in establishing and modifying the company missions, objectives and strategy

question

Agency theory suggests that the majority of a board needs to be from outside the firm (T/F)

answer

true

question

While 97% of large US corporations now use nominating committees to identify potential directors, this practice is not as common in Europe (T/F)

answer

true

question

Those directors who fail to act with due care and allow the corporation to be harmed may be held personally liable (T/F)

answer

true

question

The concept of the lead director originated in

answer

the united kingdom

question

Which of the following is NOT one of the four major issues researched by the S & P Corporate governance Scoring System?

answer

research and development initiatives

question

Under what circumstances does an INDIRECT interlocking directorate exist?

answer

when two corporations have directors who serve on the board of a third firm

question

The New York Stock Exchange (NYSE) requires corporations to have

answer

an audit committee composed entirely of independent, outside members

question

A highly involved board does all of the following EXCEPT

answer

manage the every day operations of the organization

question

The average large, publicly held US corporation has around

answer

10 directors

question

Transformational leaders transform their organizations from market leaders in one industry to market leadership in another (T/F)

answer

false

question

The U.S. Clayton Act and Banking Act of 1933

answer

prohibit interlocking directorates by U.S. companies competing in the same industry

question

From the perspective of the public, the primary job of the board of directors is

answer

to closely monitor the actions of management

question

A direct interlocking directorate occurs when two corporations have directors who also serve on the board of a third firm, such as a bank (T/F)

answer

false

question

The theory which states that problems arise in corporations because top management no longer is willing to bear the brunt of their decisions unless they own a substantial amount of stock in the corporation is called

answer

agency theory

question

The average board member of a U.S. Fortune 500 firm serves on ___ boards

answer

3

question

Hiring and firing the CEO and top management is one of the five responsibilities of the board of directors (T/F)

answer

true

question

Jeff Bezos, CEO of Amazon.com , uses the S team to engage in continuous strategic planning (T/F)

answer

true

question

An agency problem can occur when

answer

all of the above

question

Which of the following is NOT descriptive of interlocking directorates?

answer

interlocking directorates are more common in small, family owned companies

question

Fewer large corporations may keep the firm's recently retired CEO on the board after retirement since there is a greater likelihood of conflict of interest and less objectivity (T/F)

answer

true

question

Which of the following is NOT a key characteristic of transformational executive leaders?

answer

the CEO energized the board to formulate strategy

question

According to the text, most publicly owned large corporations today tend to have boards with what degree of involvement in the strategic management process?

answer

nominal to active

question

The confidence levels of executive leaders may blind them to information that is contrary to a decided course of action; this may help to understand why overconfident CEO's are more likely to conduct mergers and acquisitions (T/F)

answer

true

question

The Sarbanes-Oxley Act was designed to protect

answer

shareholders from the excesses and failed oversight of firms

question

A description of what the company is capable of becoming is referred to as

answer

strategic vision

question

A benefit of the increased disclosure requirements of the Sarbanes-Oxley Act has been more reliable corporate financial statements (T/F)

answer

true

question

The top criterion for selecting a good director in U.S. corporations is their willingness to challenge management when necessary (T/F)

answer

true

question

According to __ theory, ___ directors tend to identify with the corporation

answer

stewardship; inside

question

All of the following are true of overconfident CEO's EXCEPT

answer

overconfident CEOs were less likely to make an acquisition when they could avoid selling new stock to finance them

question

The vast majority of inside directors are from all of the following EXCEPT

answer

lower-level operating employee

question

What percentage of the Fortune 1000 U.S. corporations had boards of directors with at least one woman member in 2006?

answer

85%

question

Research reveals that the likelihood of a firm engaging in illegal behavior or being sued declines

answer

with the addition of outsiders on the board

question

More than ___ of outside directors surveyed that they had been names as part of a lawsuit against the corporation

answer

50%

question

When a board of directors is involved to a limited degree in the performance or review of selected key decisions, indicators, or programs of management, there is a ___ degree of involvement

answer

nominal participation

question

The function of a nominating committee is to

answer

find outside board members for electing by the stockholder

question

Generally, the smaller the corporation, the less active is its board of directors

answer

true

question

The ___ boards typically never initiate or determine strategy unless a crisis occurs

answer

rubber stamp

question

Executive leadership is the directing of activities toward the accomplishment of corporate objectives (T/F)

answer

true

question

The SEC requires the nominating and compensation committees are staffed entirely by outside directors (T/F)

answer

true

question

Which of the following statements is true regarding the board of directors?

answer

all of the above

question

The vast majority of inside directors are from all the following EXCEPT

answer

lower-level operating employee

question

In implementing the Sarbanes-Oxley Act, the SEC required in 2004 that a company disclose

answer

if it has adopted a code of ethics that applied to the CEO and the CFO

question

The percentage of large U.S. corporations using nominating committees to identify potential new directors is approximately

answer

97%

question

Codetermination has been used in Germany since the 1950s, but has not been used in the US (T/F)

answer

false

question

The board of directors has an obligation to approve all decisions that might affect the long-run of the corporation (T/F)

answer

true

question

The role of the board of directors in the strategic management of the corporation is likely to

answer

be more active in the future

question

Board members who are not employed by the corporation, but handle the legal or insurance needs of the firm and are thus not a true "outsider" are what kind of directors?

answer

affiliated directors

question

One study conducted by Korn/Ferry International of directors of large US corporations found that more than ___ of directors indicated that their CEOs were not utilizing them to their full potential in strategy setting process

answer

30%

question

According to a survey of 156 large corporations in what percentage of the firms were strategies first proposed in business units and then sent to headquarters for approval?

answer

65%

question

A survey of U.S. corporations found that ____ of boards of directors had at least one African American member in 2006

answer

46%

question

Surveys of large U.S. and Canadian corporations found outsiders make up what percentage of total board members?

answer

80%

question

Which of the following is NOT a trend in corporate governance expected to continue

answer

boards are getting larger

question

A careless director or directors can be held personably liable for harm done to the corporation if they failed to act with

answer

due care

question

____ theory argues that senior executive over time tend to view the corporation as an extension of themselves

answer

stewardship

question

The percentage of CEOs of British corporations who also serve as chairman of the board is

answer

5%

question

Usually, the strategic planning staff is charged with supporting only top management in the strategic planning process (T/F)

answer

false

question

Interlocking directorates are a useful method of gaining both inside information about an uncertain environment and objective expertise about potential strategies and tactics. They are however increasingly frowned upon because of the possibility of collusion (T/F)

answer

true

question

Which of the following is NOT a task of the board of directors in strategic management?

answer

to implement

question

Board members who are most likely to face conflict of interest are known as

answer

affiliated directors

question

Which country pioneered the use of worker participation on corporate boards?

answer

germany

question

Approximately 70% of the top executives of the US publicly held corporations hold the dual designation of chairman and CEO (T/F)

answer

true

question

A staggered board

answer

has only one portion of the board stand for election each year

question

Stewardship theory proposes insiders tend to identify with the corporation and is success (T/F)

answer

true

question

Under what circumstances does a DIRECT interlocking directorate exist?

answer

occurs when one or more individuals on one board also serve on a board of a second firm

question

According to the text, which of the following is NOT a typical standing committee of boards of directors?

answer

public relations committee

question

The term corporate governance refers to the relationship among the board of directors, top management, and the shareholders in determining the direction and performance of the corporation (T/F)

answer

true

question

A 2008 McKinsey and Company survey found that less than 10 percent of a board's time is spent on strategy (T/F)

answer

false

question

The role of the board of directors in the strategic management of the corporation is likely to be less active in the future (T/F)

answer

false

question

Corporation is

answer

a mechanism established to allow different parties to contribute capital, expertise and labor for their mutual benefit

question

Corporation is governed by

answer

the board of directors that oversees top management with the concurrence of the shareholders

question

Corporate Governance

answer

the relationship among the board of directors, top management and shareholders in determining the direction and performance of the corporation

question

Responsibilities of the Board of Directors

answer

sets corporate strategy, overall direction, mission or vision, hires and fires the CEO and top management, controls, monitors, or supervises top management, reviews and approves the use of resources, cares for shareholder's interests, and assures that the corporation is managed in accordance with state laws, security regulations and conflict of interest situations

question

Monitor

answer

developments inside and outside the corporation

question

Evaluate and Influence

answer

management proposals, decisions, and actions

question

Initiate and Determine

answer

the corporations mission and strategies

question

Inside Directors

answer

are officers or executives employed by the boards corporation

question

Outside directors

answer

are executives of other firms by are not employees of the boards corporation

question

Phantom (LOW)

answer

never knows what to do, if anything; no degree of involvement

question

Minimal Review (Medium)

answer

formally reviews selected issues that officers bring to its attention

question

Catalyst (High)

answer

takes the leading role in establishing and modifying the mission, objectives, strategies, and policies. it has a very active strategy committee

question

Retired Executive Directors

answer

used to work for the corporation, partly responsible for past decisions affecting current strategy

question

Family Directors

answer

decedents of the found and own significant black of stock

question

Avoiding Governance Improvements

answer

multiple classes of stock, public to private ownership, and controlled companies

question

Strategic Vision

answer

description of what the company is capable of becoming

question

According to an international selection of board of directors, which of the following tasks is the board of directors primary responsibility?

answer

setting corporate strategy, overall direction, mission, or vision

question

The inclusion of a corporation's workers on its board is called

answer

codetermination

question

According to the Sarbanes-Oxley Act, what must be true of directors serving on an audit committee?

answer

they must all be independent of the firm and receive no fees other than for services of the director

question

The Standards & Poor Corporate Governance Scoring system researches all of the following major issues EXCEPT

answer

financial transparency and information disclosure

question

Which of the following is an accurate statement concerning trends in the power structure of boards?

answer

outside directors are increasing their power in publicly held corporations and CEOs are loosening their grip on boards

question

If a top management team has a diversity of functional backgrounds, experiences, and length of time with the company, what impact does this tend to have on corporate market share and profitability?

answer

diversity in top management tends to be significantly related to improvements in corporate market share and profitability

question

What is the most effective strategy for a CEO to take regarding performance standards if she wants to command respect and influences strategy formulation and implementation?

answer

she will communicate challenging performance standards but will also show confidence in her follower's ability to meet these standards

question

The percentage of directors of small, publicly held corporations which are outsiders is approximately

answer

20%

question

Codetermination

answer

is the inclusions of a corporations employees on its board

question

The majority of outside directors are active or retired CEOs and COOs of other corporations (T/F)

answer

true

question

The percentage of CEOs of U.S. fortune 500 corporations to also serve as chairman of the board is

answer

70%

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