c. is so aggressive that boards of directors have become overly cautious. The directors are all outsiders, experienced, and run their own successful firms. c. CEOs and CFOs must personally certify the company's financial reports. b. riskier strategies with more focused diversifica-tion for the firm. d. the opportunity for higher compensation through firm growth, a reduction in managerial employment risk. d. risk managers will not find a new top management position if they should be dis-missed. "Executive compensation is a governance mechanism that seeks to align managers' and owners' interests through all of the following EXCEPT: Nor are they any less profitable, for that matter. d.The compensation committee may not have comprehensive firm performance data. a. available to comment to external analysts. c. increased shareholder participation in decision making. 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. (2020) finds that firms with older boards perform better than those with younger boards in terms of ROA. a. The Vorstand of a German corporation makes decisions about organization direction and management. "The New York Stock Exchange requires that the audit committee be: Similarly, the relationship of top management team (TMT) gender diversity and company performance is statistically significant but very small. One shared: I have some influence, and Im trying to exert my influence.. b. risk undertaken by managers to earn stock options. In order to limit Mr. Leagreet's power, Board of Directors plans to: a. lead independent d.more variable. a. available to comment to external analysts. "The ownership of major blocks of stock by institutional investors have resulted in all of the following EXCEPT: b. a standstill agreement. a. banks b. insuring that the strike price value of the options can be lowered if the organiza-tional environment becomes more risky. 1 The survey revealed dramatic differences in how directors . a. safer strategies with greater diversification for the firm. Besides the name of the director, the press releases were identical. a. increased diversification of Sierra Infusion. The Vorstand is elected by the firm's employees. b. Again, its important to remember that a significant correlational relationship does not prove causality. "Managerial employment risk is the: Managers in the U.S. receive ____ compensation than managers in the rest of the world. Its worth noting that even if the meta-analyses revealed a stronger relationship between board gender diversity and firm performance, we couldnt conclude that board gender diversity causes firm performance. Nor are they any more profitable, for that matter. a. a. greater experience in a wider range of industries, lessening of managerial employ-ment risk a. installation of an outsider as the lead director on the Board of Directors. A growing body of research including studies by McKinsey & Company has proven that companies with more women in senior executive and board roles have advantages over those that dont.. c. equally as common as data values close to the mean. c. Banks' influence over corporations is increasing. Which of the following is NOT an internal governance mechanism? Simon Leagreet, the Chairperson and CEO of L-EVA Industries, Inc., has long been the major power at L-EVA. a. elect an insider as the lead director. d. more variable, The longer the focus of managerial incentive compensation, the greater the ____ top-level man-agers. Governance is used to establish order between parties whose interests may be in conflict. b. a. equivalent d. requiring that outside directors be truly objective by having no ownership interest in the firm. d. establishing and using formal processes to evaluate the board's performance. If male and female board members are fairly similar in their values, experience, and knowledge, the addition of women to an all-male board may not increase the boards cognitive variety as one might expect at first blush. a. monitoring c. the board is homogenous incomposition. An executive's decisions often affect firm performance only over the long run. b. decreases. d.establishing and using formal processes to evaluate the board's performance. 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 company for takeover is called: d.greater concentration on Sierra's core industry. b. b. increasing the concentration of ownership of large U.S. firms. The apartment is hot or the air conditioner is not working , if and only if the temperature is 9090^{\circ}90. They prefer to start from a position of trust. She shared, I can understand what it means to be a token person. Consequently, the board is: Researchers studied 1,644 public companies. Women board directors are more likely than men to identify social issues like human rights, climate change, and income inequality as critical to corporate strategy. b. free cash flows But firms expecting a financial performance boost simply by increasing female board representation may end up disappointed. 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. b. increased diversification of the firm. Board diversity matters but concentrating on only one form of diversity isnt enough. Research suggests that boards of directors perform betterif a. the CEO is also the chairperson of the board ofdirectors. 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. a. b. enforcement Do companies with women on the board perform better than companies whose boards are all-male? b. defense tactics are opposed by institutional investors. German executives are not dedicated to the maximization of shareholder value largely because: A virtually exclusive reliance on financial controls may occur when outsider-dominated boards exist. d. reduce their employment risk, increase the company's value, Agency costs reflect all of the following EXCEPT ____ costs. 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? d. Corporate governance is best achieved with a board of directors with strong ties to management. a. high executive turnover. c. managers' risk of job loss, loss of compensation, and/or loss of reputation. a. management consultants. We showed them a press release of a fictional company, announcing the appointment of Jack Smith or Marilyn Clark as a new member of the board. 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. Based on these findings, they worked with the Chairman of the Board at Deloitte to develop recommendations for how board chairs and directors can create more egalitarian board cultures and improve their governance. 25 a. the CEO is also the chairperson of the board of directors. This will have no effect on the stock option plan design discussion, because CalPERS' main concern is stock dividends. d. governmental relations. c. the banks owing the largest shares of stock in the firm. Corporate Directors' Implicit Theories of the Roles and Duties of Boards On more hierarchical boards, the CEO, Chairman, or lead independent director tends to dominate board meetings. Research suggests that boards of directors perform better if: Research suggests that boards of directors perform better if a. the CEO is also the chairperson of the board of directors. d.independence of the committees on the firm's Board of Directors. 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. c. executive compensation systems. "The board of directors of CamCell, Inc., wishes to design a CEO compensation plan that will align the personal interests of the CEO with the interests of the shareholders in long-term firm performance. a. increases. Does Gender Diversity on Boards Really Boost Company Performance? a. risk that managers will behave opportunistically. Who is ultimately responsible for the corporate climate that resulted in this wrongdoing? b. They increase the boards cognitive variety. The greater a boards cognitive variety, the theory goes, the more options it is likely to consider and the more deeply it is likely to debate those options. d.re-invested in additional corporate assets. Can you catch two birds with one stone? The impacts of nominating c. A number of factors intervene between top-level management decisions and firm performance (e.g., unpredictable economic, social, or legal changes). 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. So, existing findings could reflect a causal relationship, a reverse-causal relationship, or the effects of other variables. a. mandating that all outside directors be drawn from government or academia rather than industry. b. internal controls have failed. c. often performing above their industry averages. a. negatively related to: Ambrose Bierce, the CEO of DictionAry, has been paid a lump sum amounting to three years' salary because DictionAry has been bought in a hostile takeover by its main competitor. In sum, the research results suggest that there is no business case for or against appointing women to corporate boards. c. Borders' decision to increase the size of its board One board member shared: We look at diversity in a lot of different ways experience, age, ethnicity, gender, etc.. b. a. governance d. Individualism. "Given the demands for greater accountability and improved performance, which of the following is NOT a voluntary change many boards of directors have initiated? Mr. Abercrombie has had striking success in reducing conflict and hostility among directors and allowing boards to develop more cohesiveness. d. The CEO was a recipient of the Golden Peacock Award for Corporate Governance. c. 50 b. company unions, which are a type of governance system. Similarly, after promising to address board diversity, Skechers explained their decision not to nominate a female director by saying that the firms primary focus is on maximizing shareholder value. In May 2019, the company nominated their first female board member following the enactment a law requiring California companies to have at least one woman on their board. For example, Norway, Spain, France, and Iceland all have laws requiring that women comprise at least 40% of boards at publicly listed companies. On analysis of the literature, we found a systematic review of non-exhaustive literature on corporate governance (ownership structure and board of directors) and firm innovation (Gonzales-Bustos & Hernndez-Lara, 2016) as well as a theoretical review on the topic (Asensio-Lpez et al., 2019).However, as far as we know, there are no prior studies on the specific association between the board . c. the firm's tax issues. The gap between CEO pay and the pay of other top executives at Chromatic was significantly larger than at Pixilair. a. 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The CEO/Chairperson of the Board has been suspected of opportunistic behavior. c. the manager's supervisory needs are lowered, the manager is allowed greater time to oversee a wider range of activities b. the total revenue of the firm. d. a poison pill. The team members are becoming concerned about the security of their jobs at Sierra Infusion. b. appoint another individual as chairperson of the board of directors. a. setting the option strike price substantially higher than the current stock price. Research suggests that boards of directors perform better if: a. outside directors own significant equity in the organization. b. inside Agricultural Chemicals, Inc., was the target of a hostile takeover six months ago. the board is homogenous in composition. b. the manager frequently invests in the acquired firm which allows them extensive profits, the manager can frequently buy excess assets divested by the acquired firm "Japanese keiretsu are: r:r:r: The apartment is hot. d.riskier strategies with greater diversification for the firm. In other words, investors seem to be penalizing, rather than rewarding, companies that strive to be more inclusive. d. The gap in compensation between CEOs in public and private companies is in-creasing. b. composed solely of outside directors. Again, we cant know for certain why board diversity doesnt predict company performance, but it seems likely that some of the following factors explain the very weak and mostly non-significant effects: While research indicates that in general male and female adults differ somewhat in their values, experiences, and knowledge (and the differences are not huge), its not clear that male and female board members differ all that much in their values, experiences, and knowledge. b. the board includes employees as voting members.c. "In Japan, the principal source of the active monitoring of large companies comes from: But academic research says otherwise. d. of the focus on stewardship-management in German firms rather than the financial performance focus of U.S. firms. b. a poison pill. a. What would you recommend? d.curvilinearly related to, "The longer the focus of managerial incentive compensation, the greater the ____ top-level managers. The CEO was involved in overstating company revenues and profits. As one long-time board director described it: The problem is how boards get formed and how you fill vacancies. a. defense tactics are usually beneficial for the executives of the target firm. The board of directors and firm innovation: A meta-analytical review "Which of the following reasons would NOT explain the difficulty of determining appropriate executive compensation? y=2x+8;y=12;1x2. c. Research shows that once a hostile takeover has been defeated, the firm is safe from other hostile takeover attempts for many years. c. The state is becoming far less dominant in determining the strategies employed by most firms. 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. Its hard to get much closer to zero. "Generally, a board member who is a source of information about a firm's day-to-day activities is classified as a(an) ____ director. c. the manager's supervisory needs are lowered, the manager is allowed greater time to oversee a wider range of activities Other things being equal, market analysts may, consciously or unconsciously, regard all-male boards as more competent than boards that are more gender-diverse. "Several members of the board of directors of American Textile Products (ATP) have proposed creating the position of lead director. b. increase the price of the firm's stock, increase the dividends paid out from free cash flows c. related The governance mechanism most closely connected with deterring unethical behaviors by hold-ing top management accountable for the corporate culture is Research suggests that boards of directors perform better if a. the CEO is also the chairperson of the board of directors. I think its also clear to say if youve got the longer-term members that came from the old established approach to the way boards were runthey may just not be quite as supportive in some cases., In boards like these, interviewees said discussing the issues rather that shrinking away from them was of utmost importance. Which of the following statements is true? 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. Ownership concentration is determined by both Stephanie Creary is an assistant professor of management and organizational behavior scholar at the Wharton School of the University of Pennsylvania. Who is ultimately responsible for the corporate climate that resulted in this wrongdoing? b. increased diversification of the firm. Combined, the board members held seats on 47 corporate boards in the U.S. across a variety of industries. Hed speak like, without taking any breaths for two hours on end., But even in hierarchical cultures, the CEO, Chairman, or lead director can help to create a more open communication environment. d. dependent. b. long-term incentives such as stock options. Older boards are better boards, so beware of diversity targets Diversity advocates often argue that gender-diverse boards make better decisions than all-male boards. a. reasonably compensating a CEO. The CEO's behav-ior may be indication of CamCell is presently searching for a new CEO. d.likely to be terminated by the acquiring firm even in a friendly takeover. c. poorly-performing firms Which of the following is a FALSE statement about corporate governance? This suggests that gender diversity on the board explains about two-tenths of 1% of the variance in company performance. a. moving toward having directors from different backgrounds 47; Gender-diverse boards also tend to adopt more progressive organizational management practices, such as work-life support programs, which increase employee satisfaction. d.the head of contract services for the Marines, Chapter 11: Organizational Structure and Cont, John David Jackson, Patricia Meglich, Robert Mathis, Sean Valentine, Information Technology Project Management: Providing Measurable Organizational Value, Operations Management: Sustainability and Supply Chain Management, canvas quiz : Blood vessels and circulation. a. making CEOs more accountable for their performance. "The board of directors of Acme Brands is discussing the design of a very generous stock option plan for its top executives. d. Large institutional investors such as pension funds, and insurance companies are relatively insignificant owners of corporate stock. The fact that a hostile takeover has occurred is proof that the firm was un-der-performing. d.potential tax burden for. c. require Mr. Leagreet to personally certify the firm's financial reports. b. requiring that outside directors be former executives of the firm. a. a. increases in executive compensation. 5 b. b. may not have a direct effect on firm performance. c. excessive management compensation. A major conflict of interest between top executives and owners, is that top executives wish to diversify the firm in order to ____, while owners wish to diversify the firm to ____. d.risk managers will not find a new top management position if they should be dismissed. It is therefore not much of a leap to assume companies appoint female directors as part of a diversity initiative. In McKinsey's previous studyconducted with 2014 numbersthat increase had been 35%. Why Investors React Negatively to Companies That Put Women on Their Boards c. the firm's tax issues. And the greater the cognitive diversity, the better the board is at solving complex problems and coming up with novel solutions. a. bonuses. Does this mean that we should not promote women to corporate boards? Working in a group, discuss how the New Therapy Company can meet the deadline and still ensure a high quality of care. b. a number of publicly-traded companies have decided to privatize. b. Historically, ____ have been at the center of German corporate governance structure. b. organizational size. For example, our interviewees on the boards of hi-tech start-ups and cyber security firms revealed that women, minorities, and younger board members often hold these coveted roles on boards in their firms and industries. 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 a. ownership concentration. "Top executives resist tying their compensation to long-term performance of the firm mainly because: Yet, the answers have not been clear or consistent. In sum, the research results suggest that there is no business case for or against appointing women to corporate boards. a. The number of women among them? b. risk undertaken by managers to earn stock options. d. likely to be terminated by the acquiring firm even in a friendly takeover. b. returned to them as dividends. Rigorous, academic studies of CEO gender and company performance tell much the same story as rigorous, academic studies of board gender diversity and company performance do. d.banks. Women should be appointed to boards for reasons of gender equality., Women Directors and Other Dimensions of Company Performance. d. reduction in R&D expenditure. Researchers have also studied the relationship between board diversity and various board decisions and practices such as acquisitions, board monitoring and dividend payouts (Ararat, Aksu, Cetin, 2015; Chen, Crossland and Huang, 2016; Chen, Leung, & Goergen, 2017). Many boards are also broadening the range of professional backgrounds considered for board member positions, allowing them to attract more socially diverse directors who bring, as one interviewee referred to it, diversity of thought. This is easier to achieve when boards avoid filling open seats with people already in their personal and professionals networks. d. reduce the size of the stock option package provided to Mr. Leagreet. a. earnings potential for: 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. a. c. lower b. Agricultural Chemicals, Inc., was the target of a hostile takeover six months ago. c. pressure the board of directors to reprice their stock options. Both the Pelzer purchase and the Alvarez sale were in transit at year-end. When executives have ownership positions or stock options with their employing firm, they are The market for corporate control may not be as efficient as previously thought as recent findings suggest that those firms targeted for takeover by active corporate raiders are Further, there is no evidence available to suggest that the addition, or presence, of women on the board actually causes a change in company performance. d. re-invested in additional corporate assets. 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. b. large institutional investors control large blocks of stock. 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. The Chinese governance system has been moving towards the Western model in recent years. What difference can Archibald expect? In contrast to hierarchical boards, more egalitarian boards have a more collegial board culture. Chapter 10 (Multiple Choice) Flashcards | Quizlet If so, board gender diversity may be positively related to accounting returns, but not market returns. c. the employees directly involved in the wrongdo-ing. Earn badges to share on LinkedIn and your resume. "Which of the following is TRUE of trends in Japan's corporate governance structure? Some boards are more hierarchical in their communication orientation while others are more egalitarian. An agency relationship exists when one party delegates Corporate governance revolves around the relationship between which two parties? d.outsidedirectors ownsignificantequityintheorganization. (Statistical significance depends in part on sample size. a. greenmail. Some have expressed concern that broadening the definition of diversity, without associated efforts to reduce bias in director selection efforts, could provide firms with an out, effectively allowing them to exclude underrepresented demographic minorities from the board. Despite the intuitive appeal of the argument that gender diversity on the board improves company performance, researchRead More c. an increased number of IPOs (initial public offerings) are expected. Shareholder value is Boards Need To Up Their Game In Terms Of Cognitive Diversity - Forbes At the board of directors level, more ethnically and cultural diverse companies were 43% more likely to see. a. determine and control the strategic direction of an organization, so that the top executives are focused on maximizing corporate profits.

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