Quiz Ch 10

A  The total number of shareholders of a company

B  The percentage of shareholders who are internal versus external

C  The ratio of owners and their specialty fields of training to the industry of the company

D  The number of large-block shareholders and the total percentage of the firm’s shares they own

A  A strategy whereby a company decides to increase the number of overall shares, which will both dilute the hostile company’s shares and increase the cost of the company overall, making the company less appealing to take over

B  A lump-sum payment of cash that is given to one or more top-level managers when the firm is acquired in a takeover bid

C  A contract between the target firm and the potential acquirer specifying that the acquirer will not purchase additional shares of the target firm for a specified period of time in exchange for a fee paid by the target firm

D  The repurchase of the target firm’s shares of stock that were obtained by the acquiring firm at a premium in exchange for an agreement that the acquirer will no longer target the company for takeover

A  Service, responsibility, modesty

B  Obligation, family, consensus

C  Integrity, responsibly, respect

D  Friendship, honor, loyalty

A  make strategic decisions to improve performance.

B  make decisions to satisfy their own self-interests.

C  seek the counsel of internal or external advisors.

D  agree to serve on other firms’ boards of directors.

A  Salaries

B  Stock performance

C  Stock awards

D  Stock options

A  a group of elected individuals whose primary responsibility is to act in the owners’ best interests by formally monitoring and controlling the firm’s top-level managers.

B  a means by which firms collaborate to achieve a shared objective.

C  the set of mechanisms used to manage the relationships among stakeholders and to determine and control the strategic direction and performance of organizations.

D  defined by the number of large-block shareholders and the total percentage of the firm’s shares they own.

A  large-block shareholder.

B  institutional owner.

C  angel investor.

D  insider.

A  To protect their investments

B  To prevent exposure for investors who might otherwise place their money in a legal gray area

C  To prove that the organization being invested in is legitimate

D  To ensure that the country’s government is in control of the business, which protects shareholders’ investments

A  ownership concentration.

B  strategic direction.

C  the market for corporate control.

D  executive compensation.

A  The CEO should diversify the company, as it has reached the end of its growth projection.

B  The Carters should appoint a family member as CEO, as research shows that family-owned firms perform better when a member of the family is the CEO.

C  The Carters must sell the company to a larger corporation.

D  The Carters should align the goals of the family and the CEO.

A  Members of the keiretsu are legally obligated to aid when members are in need.

B  Members of the keiretsu will not feel obligated to help, as they will have members of the company fend for themselves.

C  The keiretsu are companies that make a profit from lending money.

D  Members of the keiretsu are seen as family, which commands attention and allegiance.

A  corporate sponsor.

B  internal shareholder.

C  external shareholder.

D  institutional owner.

A  To please the employees, because a happy workforce will have a ripple effect on the rest of the value chain

B  To please the suppliers, as they are the highest priority

C  To determine which action will result in higher executive compensation and make that choice

D  To please as many stakeholders as possible, because if stakeholders are not minimally satisfied, they will give support to another company

A  Litigation

B  Golden parachute

C  Capital structure change

D  Charter amendment

A  Corporate governance is of concern to nations as well as to individual firms.

B  Research shows that firms seek to invest in nations with national governance standards that are acceptable to them.

C  Although corporate governance reflects company standards, it also collectively reflects the societal standards of nations.

D  The recent global emphasis on corporate governance stems mainly from the need to give shareholders more power in organizations.

A  Communication barriers

B  Cultural differences in expectations

C  The diversity and complexity of compensation plans across a corporation

D  Differences in currency conversion rates

A  diversification.

B  underdiversification.

C  overdiversification.

D  segmentation.

A  large-block shareholder.

B  outsider.

C  insider.

D  related outsider.

A  Proponents of the German structure suggest that it helps prevent corporate wrongdoing and rash decisions by “dictatorial CEOs.”

B  Critics of the German structure maintain it allows inside managers to dominate a firm’s board of directors.

C  The corporate governance practices in Germany make it easier to restructure companies more quickly.

D  All German firms are required to have a two-tiered board structure.

A  Failure to perform

B  Negative performance reviews

C  Managerial employment risk

D  Unemployment risk

A  Bribery negatively impacts the performance of firms by eating up profits.

B  Bribery makes firms less competitive, which negatively impacts a country’s economy.

C  Bribery tends to limit entrepreneurial activity that could help a country’s economy grow.

D  Bribery is impossible to monitor.

A  Hostile ownership

B  Diverse ownership

C  Diffuse ownership

D  Universal ownership

A  Yes, if Kevin knows the CEO and doesn’t like his or her personality.

B  Yes, as the CEO will not be able to be forced out if his or her performance becomes unacceptable.

C  No, because the board will be sure to elect the best individual to the chair position, regardless of current title.

D  No, because a single individual as CEO and chair of the board has proven to be very successful in the past.

A  Yes, German agencies have the same structures as U.S. agencies.

B  No, many German firms are managed and owned by the same individual.

C  Yes, German firms have the same exact issues and difficulties as U.S. firms.

D  No, many German firms are publicly owned by the government and its citizens.

A  A situation in which one party is responsible for the actions of another in a workplace setting

B  A situation in which two parties decide to invest and act as one for a united goal

C  A situation in which one party delegates decision-making responsibility to a second party for compensation

D  A group of people who are in disagreement

A  A standstill agreement; low; positive

B  A golden parachute; high; positive

C  A capital structure change; high; inconclusive

D  Greenmail; medium; negative

A  A proxy vote

B  A hostile takeover

C  A dumping of shares to drop stock price and force actions by the board

D  A coup d’état

A  Because managers and employees fear for their jobs, it allows fear to improve productivity.

B  It encourages top-level managers to be strategically competitive.

C  There are no benefits to corporate governance, which is seen as an unneeded expense.

D  It shifts accountability and responsibility for developing an ethical organizational culture and making sure the firm performs effectively from top-level managers to the board of directors.

A  The pool of prospects who are qualified to become CEO

B  A set of mechanisms used to manage the relationships among stakeholders and to determine and control the strategic direction and performance of organizations

C  A term that describes the power that purchasers have when buying shares of stocks

D  An external governance mechanism that is active when a firm’s internal governance mechanisms fail

A  Suppliers

B  Communities

C  Shareholders

D  Employees