a. the strategic decision making process. c. Research shows that once a hostile takeover has been defeated, the firm is safe from other hostile takeover attempts for many years. c. an increased number of IPOs (initial public offerings) are expected. "The board of directors of Acme Brands is discussing the design of a very generous stock option plan for its top executives. "Managerial employment risk is the: A recent study, of board composition and financial data on 1,644 public companies in the United States between 1998 and 2011, finds that companies that appoint women to the board are no more profitable than those that do not. b. positively related to "Given the demands for greater accountability and improved performance, which of the following is NOT a voluntary change many boards of directors have initiated? b. a standstill agreement. b. free cash flows What circumstances would most likely have initiated this proposal? One interviewee commented on how the board as a whole believed in the importance of diversity, but longer-term board members still struggled to understand its value. Ambrose received: c. Institutional investors disapprove of long-term executive incentive plans and they may sell their blocks of stock in CamCell. c. CEOs and CFOs must personally certify the company's financial reports. Ditto for studies of the gender diversity of the top management team. Managers in the U.S. receive ____ compensation than managers in the rest of the world. d.Traditionally privately-owned Japanese firms are going public. "A virtually exclusive reliance on financial controls may occur when outsider-dominated boards exist. The CEO's behav-ior may be indication of For example, Norway, Spain, France, and Iceland all have laws requiring that women comprise at least 40% of boards at publicly listed companies. Research suggests that firms with ____ perform better, especially when collaboration among top management team members is important. d.The compensation committee may not have comprehensive firm performance data. b. There are small but dependably positive associations of female representation in CEO positions and TMTs with long-term value creation for a firms fiscal outcomes. In other words, investors seem to be penalizing, rather than rewarding, companies that strive to be more inclusive. The Vorstand is elected by the firm's employees. d.This type of plan is likely to cause the CEO to underinvest in R&D in order to boost CamCell's long-term profitability. The fact that a hostile takeover has occurred is proof that the firm was under-performing. a. Our interviewees suggested that social diversity (e.g., gender, race/ethnicity, and age diversity) and professional diversity are both important for increasing the diversity of perspectives represented on the board. d. the opportunity for higher compensation through firm growth, a reduction in mana-gerial employment risk. a. mandating that all outside directors be drawn from government or academia rather than industry. d. the board of directors. d. outside directors own significant equity in the organization. b. likely to gain financially if their employing firm is taken over by another. d. always outperforming their industry. c. having the stock option plan designed by insiders on the board of directors who are familiar with day-to-day operations of the firm. In the chapter Strategic Focus, the weakness of corporate boards was exemplified by ___________________. c. compensating directors with stock options rather than with fixed remuneration The gap between CEO pay and the pay of other top executives at Chromatic was significantly larger than at Pixilair. One means that is considered to improve the effectiveness of outside directors is This wouldnt be a problem if diversity initiatives were not seen by many investors as little more than costly experiments. Which of the following is most likely to be TRUE? The team members are becoming concerned about the security of their jobs at Sierra Infusion. 25 German executives are not dedicated to the maximization of shareholder value largely because: "There is some evidence that performance bonuses for executives based on annual results are ____ investments in R&D where the firm was highly diversified. a. the strategic decision making process. While its possible that the addition of women to the board causes an increase in CSR, existing research cannot prove it. a. a golden parachute. It is therefore not much of a leap to assume companies appoint female directors as part of a diversity initiative. b. the market for corporate control. What difference can Archibald expect? b. selecting new CEOs. Abercrombie should find significant need for his services in companies in transitional economies. Which of the following is NOT an internal governance mechanism? b. d. The firing by President Obama of the CEO of General Motors because the board had failed to act in previous years. Research suggests that boards of directors perform better if d. the number of outside directors and total percentage of shares they own. d.companies in mature, slow-cycle industries. b. c. Banks' influence over corporations is increas-ing. b. c. executive compensation systems. Women should be appointed to boards for reasons of gender equality, but not because gender diversity on boards leads to improvements in company performance. Research suggests that boards of directors perform better if a. the CEO is also the chairperson of the board of directors. "The board of directors of CyberScope, Inc., is designing a stock option plan for its CEO that will motivate the CEO to increase the market value of the firm. c. agency a. increases shareholder value significantly. a. a uniform compensation plan for all corporate executives, U.S. and foreign alike. If investors are indeed interpreting female appointments as a sign that the company is less committed to maximizing returns to their shareholders, the effect of increases in board diversity should be larger for those companies that demonstrate commitment to social goals in other ways. One board member shared: We look at diversity in a lot of different ways experience, age, ethnicity, gender, etc.. c. the banks owing the largest shares of stock in the firm. Despite popular press accounts that suggest that teams high in gender diversity outperform those composed only of men or only of women, rigorous research does not support this conclusion. They also raised. If Culver had just signed a blank piece of paper after being told that the bank would make a receipt out of it by printing the appropriate words around his signature, would he be able to avail himself of the defense of fraud? But research conducted by consulting firms and financial institutions is not as rigorous as peer-reviewed academic research. Firms should be selecting the very best directors from the largest talent pool possible, and excluding women from that pool to avoid market penalties would be counterproductive. We dont know and cannot know. The CEO tended to dominate the conversation. "The CEO of Skyco, a publicly-traded company that has been earning below-average returns, has been publicly criticized by shareholders for persuading the board of directors to give her interest-free loans, for having the company purchase and furnish a lavish apartment in Paris for her personal use on her twice-yearly trips there, and for excessive stock options. the board is homogenous in composition. b. Japanese firms will have little interest in Mr. Abercrombie's specialty because these skills are already practiced at a high level. During the debate, one of the directors raises the point that CalPERS owns a significant portion of Acme Brand stock. d. re-invested in additional corporate assets. At a meeting over dinner, the top management team agrees to go to the board of directors with a proposal for: Corporate governance mechanisms sometimes fail to monitor and control top man-agers' decisions. Differing views between board members act as a governance mechanism, preventing radical decisions from being made. c. marginal profits For example, a few years ago, Apples shareholders voted against recruiting more minorities to its top management team, after the company argued that such a measure would be overly restrictive. d.outsidedirectors ownsignificantequityintheorganization. c. The CEO/Chairperson of the board has been suspected of opportunistic behavior. In McKinsey's previous studyconducted with 2014 numbersthat increase had been 35%. The relationship between CEO gender and long-term company performance is statistically significant, the authors find, but tiny. The argument that gender diversity on the board will improve company performance rests on the assumption that the addition of one or more women to an all-male board will increase the boards cognitive variety because women the argument goes differ from men in their values, experiences, and knowledge. c. crossing the palm with silver. d. The gap in compensation between CEOs in public and private companies is in-creasing. b. increase the price of the firm's stock, increase the dividends paid out from free cash flows In contrast to managers' desires, shareholders usually prefer that free cash flows be The research found that diversity doesnt guarantee a better performing board and firm; rather, the culture of the board is what can affect how well diverse boards perform their duties and oversee their firms. b. inside d.the board of directors. Managers may decide to invest ____ in products that are not associated with the firm's current lines of business to increase the firm's level of diversification and decrease their employment risk. d.greater concentration on Sierra's core industry. Research has found little to no evidence supporting the idea that companies with female board directors perform better than companies run by all-male boards. 1. destination. "Executive compensation is a governance mechanism that seeks to align managers' and owners' interests through all of the following EXCEPT: b. firms earning above-average returns The authors conclude the following: Undoubtedly, breaking the glass ceiling matters. b. the total revenue of the firm. d.defense tactics make the costs of a takeover lower. b. CalPERS' interest in Acme Brands will cause the directors to reduce the size of the stock option plan from what it would otherwise have been. b. increased diversification of the firm. a. b. returned to them as dividends. But are investors walking the walk on board diversity? a. equivalent See answer Advertisement sandlee09 Answer: c. Explanation: d.governmental relations. What would you recommend? a. available to comment to external analysts. A virtually exclusive reliance on financial controls may occur when outsider-dominated boards exist. And in many cases, this might mean recruiting board members outside of existing networks. a. earnings potential for: d. The CEO was a recipient of the Golden Peacock Award for Corporate Governance. Even if women who are named to corporate boards are different from the men on these boards and even if the women do speak up and influence board decision-making, their influence may not be consistently positive (or consistently negative, for that matter). Research suggests that boards of directors perform better if a. the CEO is also the chairperson of the board of directors. ____ is an important influence in Japanese corporate governance structures. d. large; large. Consensus Executive compensation is a governance mechanism that seeks to align managers' and owners' interests through all of the following EXCEPT There have been many rigorous, peer-reviewed studies of board gender diversity. primary focus is on maximizing shareholder value. (2020) finds that firms with older boards perform better than those with younger boards in terms of ROA. c. Membership of U.S. boards of directors is less directly influenced by the company's employees than is the membership of German Aufsichsrat. Similarly, the relationship of top management team (TMT) gender diversity and company performance is statistically significant but very small. d.prevented by the Sarbanes-Oxley Act from owning more than 50% of the stock of any one firm. b. the appointment by EasyJet of a new chairman of the board a. the firm's free cash flow. Still, given all the studies of board diversity and company performance that have been conducted to date, it seems very unlikely that new research will reveal a strong, clear relationship between board diversity and company performance. Mr. Abercrombie is con-sidering expanding his consulting practice overseas. In this opinion piece, Wharton management professor Katherine Klein summarizes academic research on the topic and discusses the possible reasons and implications for these surprising findings. c. The CEO/Chairperson of the Board has been suspected of opportunistic behavior. The number of women among them? b. company unions which are a type of governance system. One board member discussed her experience on a board: I do feel Im listened to The CEO makes a big difference in terms of the openness., Similarly, another shared how a different CEO made it easier for board members to access the management team: It starts, again, with the CEO not playing the hierarchical role and saying, You cant talk to one of my VPs unless you come through meSo we had access to the next level of management. "Amos Ball, Inc., is a printing company in Iowa that has been family owned and managed for three generations. This seems unlikely. b. requiring that outside directors be former executives of the firm. Boards of directors are now becoming more involved in One explained that their collegial board culture resulted from information being shared openly, with little back channeling or meeting outside of the formal meeting to raise concerns. c. increased shareholder participation in decision making. CamCell is presently searching for a new CEO. "Usually, large block shareholders are considered to be those shareholders with at least ____ percent of the firm's stock. d. reduce the size of the stock option package provided to Mr. Leagreet. c. gives the Board of Directors more power. a. banks And to the extent investors care about shareholder value, they will penalize those companies they suspect are putting other goals first. This plan will be very attractive in luring candidates for the CEO position. c. equally as common as data values close to the mean. b. the market for corporate control. Who is ultimately responsible for the corporate climate that resulted in this wrongdoing? c. strategy implementation actions to functional managers. d. has weakened the effect of other governance mechanisms. "In the U.S. the fundamental goal of business is to: "In the U.S., a firm's key stakeholder(s) is(are) the: "Which of the following is NOT an internal governance mechanism? a. usually on the verge of bankruptcy. Another explanation is that investors react to what they perceive to be a change in firm preferences. The Chinese governance system has been moving towards the Western model in recent years. a. significant pay reductions for many corporate CEOs Implementing a director appraisal system. a. negatively related to: In sum, the research results suggest that there is no business case for or against appointing women to corporate boards. We merged our data on board composition and firm financials with social performance ratings from KLD STATS, an index for socially responsible investing. b. enforcement Consequently, the board is: The Sarbanes-Oxley Act requires all of the following EXCEPT: b. the board includes employees as voting members. All rights reserved. b. enforcement d. encumbered. b. financial responsibility to employees. b. increased diversification of the firm. c. strategy implementation actions to functional managers. a. monitoring a. moving toward having directors from different backgrounds "The use of excessively-generous stock options for executive compensation has been slowed in the past couple years for all of the following reasons EXCEPT: "Archibald Smith has moved from an upper-middle management job at Chromatic Array, Inc., to a similar position with Pixilair Corporation. Idea diversity is also important., To offset these concerns, some boards are ensuring that skills and expertise, along with demographics, are front and center in their recruiting processes. c. liable for any illegal actions by the top management team. a. organizational performance. d.the board of directors. They are more a function of general market conditions. a. the firm's free cash flow. c. incentives for c. pressure the board of directors to reprice their stock options. a. earnings potential for Several members of the board of directors of American Textile Products (ATP) have proposed creating the position of lead director. Nor are they any more profitable, for that matter. "In Japan, the principal source of the active monitoring of large companies comes from: c. related a. some foreign firms have delisted on U.S. stock exchanges. ____ is an important influence in Japanese corporate governance structures. "Generally, a board member who is a source of information about a firm's day-to-day activities is classified as a(an) ____ director. Many boards continue to recruit directors from the pool of current or former CEO/CFOs, and changing demographics within these pools do present opportunities to recruit more diverse members. It is not because companies perform worse after they appoint female directors. A recent study, of board. b. may not have a direct effect on firm performance. Rigorous, peer-reviewed studies suggest that companies do not perform better when they have women on the board. d. establishing and using formal processes to evaluate the board's performance. Consequently, the board has decided on an incentive plan that involves payout based on the firm's performance five years in the future. a. bonuses. Which of the following reasons would NOT explain the difficulty of determining appropriate executive compensation? The CEO and the top executives successfully fended off the takeover and are concentrating on strategies to improve the performance of the firm. b. 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An immense investigative effort has been devoted to these questions: over 140 studies in the past several decades, conducted in dozens of countries, and published in journals from many different disciplines and theoretical traditions. "The interests of multinational corporations' shareholders may be best served when there is: a. increases in executive compensation. a. making CEOs more accountable for their performance. c. elevation of foreign executive compensation to U.S. levels. d. ownership of a company to a second party. The board has been successful in reducing the percentage of CEO pay that is composed of stock options. To achieve cognitive diversity, then, we should focus on dimensions of diversity other than gender. b. more common than data values close to the mean. b. executive compensation that is primarily based on long-term performance. a. defense tactics are usually beneficial for the executives of the target firm. Research suggests that firms with ____ perform better, especially when collaboration among top management team members is important: A primary objective of corporate governance is to: Which of the following is a FALSE statement about corporate governance? This isnt a strong relationship, but its a good bit stronger than the relationship between board diversity and corporate performance. c. the government. Which of the following statements is likely to be TRUE? c. safer strategies with more focused diversifica-tion for the firm. There is overwhelming evidence to support the value of having more women in senior leadership positions. And even when individuals who are minorities, tokens, or outliers speak up, the majority group members may discount their views. b. institutional shareholders a. b. a poison pill. c. require Mr. Leagreet to personally certify the firm's financial reports. What amount should Stallman report as its December 31 inventory? Board gender diversity thus explains about 1% of the variance in companies engagement in CSR. r:r:r: The apartment is hot. d. Mr. Abercrombie should find significant need for his services in companies in tran-sitional economies. After all, both male and female board members are likely to be selected for their professional accomplishments, experience, and competence. Seven. d. Corporate governance is best achieved with a board of directors with strong ties to management. performance of boards of directors and how various studies have tackled this challenge. (Statistical significance depends in part on sample size. Couple times it hasnt been but someone will just say, Hey thats not very respectful, you know the way you just said that., Several interviewees told us that boards that value open communication are more likely to engage in conversations about diversity even those that believe they still have a long way to go. If so, board gender diversity may be positively related to accounting returns, but not market returns. If these dynamics occur within corporate boards, boards may not take full advantage of their own cognitive variety. According to the excerpt, how do production processes affect the comparative advantage of the United States? b. The repurchase at a premium of shares of stock that have been acquired by the aggressor firm in a hostile takeover in exchange for an agreement that the aggressor will no longer target the com-pany for takeover is called It is worth noting that gender diversity in other kinds of work teams is not significantly positively related to performance, either. c. uncontrollable events may affect the long-term performance of the firm. d. reduce their employment risk, increase the company's value, Agency costs reflect all of the following EXCEPT ____ costs. But while many prescriptions for improving corporate governance focus on the structure of. a. used to diversify the firm. c. salary. d. risk managers will not find a new top management position if they should be dis-missed. A. greater experience in a wider range of indus-tries, lessening of managerial employment risk d.internal auditing costs have increased by about one-third. Agricultural Chemicals, Inc., was the target of a hostile takeover six months ago. c. liable for any illegal actions by the top management team. In research over the last five years, we found that only 24 percent of the boards of companies listed in the US and having over $1 billion in revenues were digitally savvy, and that these companies outperformed the others in our research on key metrics. "As ownership of the corporation is diffused, shareholders' ability to monitor managerial decisions: ANS: D PTS: 1 DIF: Medium d. a. greenmail. The average correlation between CEO gender and long-term financial performance is .007. c. salary. The CEO's behavior may be indication of: b. higher Which of the following statements is about corporate governance in Germany is FALSE? b. large institutional investors control large blocks of stock. The market for corporate control serves as a means of governance when d. The CEO and top executives should not consider their jobs secure. There was, however, a difference in the perceived goals of the company. d. likely to be terminated by the acquiring firm even in a friendly takeover. d. defense tactics make the costs of a takeover lower. b. d. outside directors own significant equity in the organization. When individuals are minorities, tokens, or outliers in a group, they often self-censor, holding back from expressing beliefs and opinions that run counter to the beliefs and opinions of the majority of the group. "The ownership of major blocks of stock by institutional investors have resulted in all of the following EXCEPT: She said, Having a diversity on the board does not just mean having a bunch of CEOs or a bunch of capitalists.Having board members with different roles whether its a CIO or a CTO or you know independent board directors that come from a different background is really good. d.requiring that outside directors be truly objective by having no ownership interest in the firm. d.a poison pill. d. made up of CPAs with auditing experience. Both the Pelzer purchase and the Alvarez sale were in transit at year-end. The CEO of Skyco, a publicly-traded company that has been earning below-average returns, has been publicly criticized by shareholders for persuading the board of directors to give her inter-est-free loans, for having the company purchase and furnish a lavish apartment in Paris for her personal use on her twice-yearly trips there, and for excessive stock options. d.of the focus on stewardship-management in German firms rather than the financial perform-ance focus of U.S. firms. The compensation of top executives of Chinese companies is closely related to pri-or and current financial performance of the firm. Which of the following is TRUE of trends in Japan's corporate governance structure? 5. mechanics and neural control of contraction, Information Technology Project Management: Providing Measurable Organizational Value, John David Jackson, Patricia Meglich, Robert Mathis, Sean Valentine. d. Large institutional investors such as pension funds, and insurance companies are relatively insignificant owners of corporate stock. a. a uniform compensation plan for all corporate executives, U.S. and foreign alike. While the relationship between board gender diversity and company performance is very weak, there appears to be a somewhat stronger relationship between board gender diversity and corporate social responsibility (CSR). To make diverse boards more effective, boards need to have a more egalitarian culture one that elevates different voices, integrates contrasting insights, and welcomes conversations about diversity. b. defense tactics are opposed by institutional investors. d. a silver handshake. d.For legal reasons, the board cannot consider the interests of CalPERS over the interests of its top executives. And, finally, even if the addition of women to corporate boards does improve cognitive variety and decision making, companies may only see benefits to their accounting performance (their sales, profits, return on assets, for example) not their market returns. Research suggests that boards of directors perform better ifa. The directors are all outsiders, experienced, and run their own successful firms. "All of the following statements are TRUE about the use of defense tactics by the target firm during a hostile takeover EXCEPT: a. usually on the verge of bankruptcy. d. incentive. d.penalties for inadequate firm performance. Stallman Company took a physical inventory on December 31 and determined that goods costing $200,000 were on hand.

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