1. Corporate governance:
A.complies with a set of global standards.
B.is independent of both shareholder theory and stakeholder theory.
C.seeks to minimize and manage conflicting interests between insiders and external shareholders.
2. Under the stakeholder theory, corporate governance is most consistent with a system of:
A.internal controls and procedures by which individual companies are managed.
B.defined roles for management and the majority shareowner(s).
C.checks and balances to minimize the conflicting interests among shareowners.
3. Which group of company stakeholders would be least affected if the firm’s financial position weakens?
A.Suppliers.
B.Customers.
C.Managers and employees.
4. Which of the following represents a principal–agent conflict between shareholders and management?
A.Risk tolerance.
B.Multiple share classes.
C.Accounting and reporting practices.
5. The type of voting in board elections that is most beneficial to shareholders with a small number of shares is best described as:
A.statutory voting.
B.voting by proxy.
C.cumulative voting.
6. Which of the following issues discussed at a shareholders’ general meeting would most likely require only a simple majority vote for approval?
A.Voting on a merger.
B.Election of directors.
C.Amendments to bylaws.
7. Which of the following statements regarding stakeholder management is most accurate?
A.Company management ensures compliance with all applicable laws and regulations.
B.Directors are excluded from voting on transactions in which they hold material interest.
C.The use of variable incentive plans in executive remuneration is decreasing.
8. In countries where employee representatives commonly sit on supervisory boards, the employee representatives are most likely:
A.appointed by the CEO.
B.elected by employees.
C.members of the management board.
9. Which of the following represents a responsibility of a company’s board of directors?
A.Implementation of strategy.
B.Enterprise risk management.
C.Considering the interests of shareholders only.
10. Which of the following best allows a board of directors to act in the interest of the company and shareholders?
A.Independent board members are selected from outside the industry.
B.Internal directors provide monitoring of the firm’s management.
C.The board has the authority to select and terminate senior management.