Question 1

Which of the following is true of Anglo-American corporate governance systems but not true of German-Japanese systems?

Accepted Answer

A)  ​It is bank-oriented and network-based.
B)  ​It relies mostly on exit-based external systems.
C)   ​It could be described as stakeholder capitalism.
D)   ​It is a highly developed successful economy.E) B) and C)
F) None of the above

Question 2

Convergence advocates argue that a "survival-of the-fittest" process will force firms globally to accept the best practices exemplified by Anglo-American practices.

Accepted Answer

A) True 
 B)False

Question 3

The label of __________ has been applied to management focus on stock prices based on the view that the purpose of firms is to serve the economic interests of shareholders.

Accepted Answer

A)  ​Shareholder capitalism.
B)  ​Stewardship theory.
C)   ​CEO duality.
D)   ​Governance package.E) A) and B)
F) A) and C)

Question 4

Internal governance mechanisms employed by boards of directors include "carrots" and "sticks."

Accepted Answer

A) True 
 B)False

Question 5

You are the founder of a firm that appears to have significant long-term growth potential. Right now you and your family own 100% of the firm's shares and you are trying to figure out whether to keep things that way. How might you do that? Should you do that?

Accepted Answer

In the United States, inheritance tax an...

Question 6

Agency theory assumes that managers:

Accepted Answer

A)  Have a responsibility to the owners.
B)  Avoid opportunistic and self-serving activities.
C)   Eliminate agency costs.
D)   Can be left to their own devices.E) B) and D)
F) B) and C)

Question 7

The view that private ownership is superior to state ownership in economic policy making is known as the:

Accepted Answer

A)  ​Beijing Consensus.
B)  ​Washington Consensus.
C)   ​Moral hazard.
D)   ​Stewardship theory.E) A) and B)
F) C) and D)

Question 8

Managerial human capital refers to the skills and abilities of top managers and directors.

Accepted Answer

A) True 
 B)False

Question 9

The market for private equity involves going private by tapping into private equity.

Accepted Answer

A) True 
 B)False

Question 10

Diffused ownership is the opposite of concentrated ownership, and is more common in:

Accepted Answer

A)  The United States and United Kingdom.
B)  South America.
C)   Asia.
D)   Africa.E) A) and C)
F) B) and C)

Question 11

When is it best for a board of directors to use a "carrot" as a governance mechanism, and when is it better to use a "stick"?

Accepted Answer

​In order to better motivate managers, i...

Question 12

Agency problems are eliminated by reducing information asymmetries.

Accepted Answer

A) True 
 B)False

Question 13

Strategists should:

Accepted Answer

A)  Understand the nature of principal-agent and principal-principal conflicts to create better governance mechanisms.
B)  Develop firm-specific capabilities to differentiate on governance dimensions.
C)   Understand the rules, anticipate changes, and be aware of differences, especially when doing business abroad.
D)   All of the above.E) A) and D)
F) A) and B)

Question 14

From a corporate governance standpoint, a narrow scope may be indicative of managers' empire-building and risk reduction.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following would be considered a benefit to having inside directors on a board of directors?

Accepted Answer

A)  ​Greater independence from managerial influence
B)  ​Greater first-hand knowledge about the firm.
C)   ​More effective control of managers.
D)   ​None of the above.E) None of the above
F) A) and B)

Question 16

CEO duality refers to a situation in which two people share the role of CEO.

Accepted Answer

A) True 
 B)False

Question 17

Three decades of privatization suggest all of the following EXCEPT:

Accepted Answer

A)  Privatization to insiders helps improve the performance of small firms.
B)  In large corporations privatization to insiders, without external governance pressures, is hardly conducive for needed restructuring.
C)   Outside ownership and control, preferably by blockholders, funds, foreigners, and/ or banks, are more likely to facilitate restructuring.
D)   When outside investors such as institutional investors do come in, they fail to assert their power.E) B) and C)
F) A) and D)

Question 18

The trend around the world is to introduce more inside directors and fewer outside directors.

Accepted Answer

A) True 
 B)False

Question 19

Overall, governance practices need to fit with the nature of the industry in which firms are competing. This cautions against prescribing universal "best" practices.

Accepted Answer

A) True 
 B)False

Question 20

In recent years, CEO duality has:

Accepted Answer

A)  ​Is no longer allowed for firms operating in the United States.
B)  ​Increased from 12% in 2002 to 48% in 2010.
C)   ​Become a less common practice among firms around the world.
D)   ​Decreased based on conclusive research evidence showing it is less effective than nonduality.E) A) and B)
F) C) and D)

Exam 11: Governing the Corporation Around the World

Convergence advocates argue that a "survival-of the-fittest" process will force firms globally to accept the best practices exemplified by Anglo-American practices.

Correct AnswerverifiedShow Answer

Managerial human capital refers to the skills and abilities of top managers and directors.

Correct AnswerverifiedShow Answer

From a corporate governance standpoint, a narrow scope may be indicative of managers' empire-building and risk reduction.

Correct AnswerverifiedShow Answer

The view that private ownership is superior to state ownership in economic policy making is known as the:

Correct AnswerverifiedShow Answer

Three decades of privatization suggest all of the following EXCEPT:

Correct AnswerverifiedShow Answer

When is it best for a board of directors to use a "carrot" as a governance mechanism, and when is it better to use a "stick"?

Correct Answerverified​In order to better motivate managers, i...View AnswerShow Answer

Internal governance mechanisms employed by boards of directors include "carrots" and "sticks."

Correct AnswerverifiedShow Answer

In recent years, CEO duality has:

Correct AnswerverifiedShow Answer

Overall, governance practices need to fit with the nature of the industry in which firms are competing. This cautions against prescribing universal "best" practices.

Correct AnswerverifiedShow Answer

Diffused ownership is the opposite of concentrated ownership, and is more common in:

Correct AnswerverifiedShow Answer

Agency theory assumes that managers:

Correct AnswerverifiedShow Answer

Which of the following is true of Anglo-American corporate governance systems but not true of German-Japanese systems?

Correct AnswerverifiedShow Answer

Agency problems are eliminated by reducing information asymmetries.

Correct AnswerverifiedShow Answer

Which of the following would be considered a benefit to having inside directors on a board of directors?

Correct AnswerverifiedShow Answer

The label of __________ has been applied to management focus on stock prices based on the view that the purpose of firms is to serve the economic interests of shareholders.

Correct AnswerverifiedShow Answer

Strategists should:

Correct AnswerverifiedShow Answer

The trend around the world is to introduce more inside directors and fewer outside directors.

Correct AnswerverifiedShow Answer

The market for private equity involves going private by tapping into private equity.

Correct AnswerverifiedShow Answer

CEO duality refers to a situation in which two people share the role of CEO.

Correct AnswerverifiedShow Answer

You are the founder of a firm that appears to have significant long-term growth potential. Right now you and your family own 100% of the firm's shares and you are trying to figure out whether to keep things that way. How might you do that? Should you do that?

Correct AnswerverifiedIn the United States, inheritance tax an...View AnswerShow Answer

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In order to better motivate managers, i...
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In the United States, inheritance tax an...
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