research suggests that boards of directors perform better if
The board wishes the CEO to take more short-term risks in order to achieve potentially higher long-term returns. c. is so aggressive that boards of directors have become overly cautious. a. usually on the verge of bankruptcy. d. outside directors own significant equity in the organization. b. risks borne by ANS: D PTS: 1 DIF: Medium REF: 314 d. a. moving toward having directors from different backgrounds The chapter Opening Case suggests that ___________ is (are) frequently blamed for high CEO pay during periods where corporate performance has been poor. c. often performing above their industry averages. "Shareholder value is: Which of the following is TRUE of trends in Japan's corporate governance structure? The fact that two quite distinctive meta-analyses reached nearly identical conclusions carries a lot of weight. "Recent research evidence shows that ownership concentration is associated with: a. ATP has been the initiator of several hostile takeovers in the last two years. c. A number of factors intervene between top-level management decisions and firm performance. After all, both male and female board members are likely to be selected for their professional accomplishments, experience, and competence. "As ownership of the corporation is diffused, shareholders' ability to monitor managerial decisions: c. poorly-performing firms As one long-time board director described it: The problem is how boards get formed and how you fill vacancies. Some research suggests, for example, that gender-diverse boards make fewer acquisitions than all-male boards (. Which of the following is NOT an internal governance mechanism? 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. Researchers studied 1,644 public companies. It might be unconscious bias. d. the difference in risk propensity between owners and managers. "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. pressure the board of directors to reprice their stock options. Given the findings of research on board gender diversity, one might wonder about the effects on company performance of CEO gender and top management team gender diversity. To test this theory, we conducted an experiment with 193 alumni and current students of a top-tier international business school. Companies that engage in CSR, or intend to do so, may be particularly inclined to appoint women to the board. d. the top management team's interests and the owners' interests are aligned. a. generate free cash flows, reduce the risk of total firm failure "Usually, large block shareholders are considered to be those shareholders with at least ____ percent of the firm's stock. Write the statements in symbolic form . d. re-invested in additional corporate assets. b. returned to them as dividends. This wouldnt be a problem if diversity initiatives were not seen by many investors as little more than costly experiments. c. the firm's top managers. b. strengthening the internal management and accounting control systems 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. d. encumbered. People believed that the company that appointed Marilyn cared more about improving the social performance of the firm and less about maximizing shareholder value, compared to the company that appointed Jack. "The ownership of major blocks of stock by institutional investors have resulted in all of the following EXCEPT: Spoiler alert: Rigorous, peer-reviewed studies suggest that companies do not perform better when they have women on the board. Which of the following statements is most likely to be TRUE? a. d. establishing and using formal processes to evaluate the board's performance. As an illustration, I show that two current measures of board of director performance, board meeting activity and director attendance, suggest that the boards of Asian firms do not compare favorably to the boards of firms from developed markets. a. the CEO is also the chairperson of the board of directors. Managerial employment risk is the a. unsubstantial profits "Top executives resist tying their compensation to long-term performance of the firm mainly because: But while many prescriptions for improving corporate governance focus on the structure of. d.75. 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. d. the number of outside directors and total percentage of shares they own. "The market for corporate control serves as a means of governance when: b. likely to gain financially if their employing firm is taken over by another. b. banks and other lending institutions that have provided major financing to the firm. 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. likely to gain financially if their employing firm is taken over by another. c. strategy implementation actions to functional managers. a. banks It is not because companies perform worse after they appoint female directors. Consequently, the board is: d. dependent. Find the area bounded by the graphs of the indicated equations over the given intervals (when stated). Using meta-analytic techniques, we have uncovered findings that help to settle some of those answers. Because meta-analyses provide a statistical summary a sophisticated averaging of the results of prior studies, their findings are much more credible than the findings of any single study. In other words, investors seem to be penalizing, rather than rewarding, companies that strive to be more inclusive. d.the difference in risk propensity between owners and managers. Nor are they any less profitable, for that matter. a. a uniform compensation plan for all corporate executives, U.S. and foreign alike. b. the board includes employees as voting members. b. the market for corporate control. 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 ____. You need the right culture and structure. c. determined by the size of the firm. d.risk managers will not find a new top management position if they should be dismissed. d.the board of directors. 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 Diversity, Inclusion, and Belonging Course. 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. In contrast to managers' desires, shareholders usually prefer that free cash flows be a. safer strategies with greater diversification for the firm. c. the laxity of institutional investors. d.encumbered. c. A number of factors intervene between top-level management decisions and firm performance (e.g., unpredictable economic, social, or legal changes). And the greater the cognitive diversity, the better the board is at solving complex problems and coming up with novel solutions. The Vorstand is elected by the firm's employees. 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. Requiring that the directors own stock in the company. The CEO and the top executives successfully fended off the takeover and are concentrating on strategies to improve the performance of the firm. The CEO was involved in overstating company revenues and profits. b. risks borne by If so, board gender diversity may be positively related to accounting returns, but not market returns. Why or why not? a. high executive turnover. When executives have ownership positions or stock options with their employing firm, they are c. marginal profits Which of the following statements is most likely to be TRUE? b. a weak board of directors. 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. a. Satyam's stock price suffered a significant decline. a. the strategic decision making process. c. German firms will not be interested in Mr. Abercrombie's services because the German system of decision-making is based on authority and few conflicts emerge. Research suggests that firms with ____ perform better, especially when collaboration among top management team members is important. d.more variable. d. large; large. 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). On January 1, California law said that all locally headquartered publicly traded companies must have at least one female director by 2020. As a means of increasing profits, IFS has used substandard ingredients in these meals and has consistently lied about this practice during quality investiga-tions by the Marines. a. d. Mr. Abercrombie should find significant need for his services in companies in tran-sitional economies. a. a. equivalent a. c. Competition d.greater concentration on Sierra's core industry. b. increasing the concentration of ownership of large U.S. firms. d. the CEO is also the chairperson of the board of directors. All of the following are consequences of the Sarbanes-Oxley Act EXCEPT James Abercrombie has a thriving consulting firm specializing in training boards of directors in decision-making skills. Pletzer, Nikolova, Kedzior, and Voelpel (2015) took a different approach, conducting a meta-analysis of a smaller set of studies 20 studies that were published in peer-reviewed academic journals and that tested the relationship between board gender diversity and firm financial performance (return on assets, return on equity, and Tobins Q). b. riskier strategies with more focused diversification for the firm. b. internal controls have failed. b. executive compensation that is primarily based on long-term performance. d. greater concentration on Sierra's core industry. b. decreases. c. the firm's top managers. The decisions made by top-level managers are typically complex and nonroutine. b. insuring that the strike price value of the options can be lowered if the organiza-tional environment becomes more risky. Am-brose received On more hierarchical boards, the CEO, Chairman, or lead independent director tends to dominate board meetings. To establish causal effects, you need to conduct a randomized control trial. "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? b. more common than data values close to the mean. Mr. Abercrombie has had striking success in reducing conflict and hostil-ity among directors and allowing boards to develop more cohesiveness. d. likely to be terminated by the acquiring firm even in a friendly takeover. b. government auditors. "Amos Ball, Inc., is a printing company in Iowa that has been family owned and managed for three generations. However, rigorous, peer-reviewed academic research paints a different picture. c. require Mr. Leagreet to personally certify the firm's financial reports. d.internal auditing costs have increased by about one-third. Depending on which meta-analysis you read, board gender diversity either has a very weak relationship with board performance or no relationship at all. A business journal from the Wharton School of the University of Pennsylvania. d. tying the compensation of CEOs to measurable financial criteria. 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. So, existing findings could reflect a causal relationship, a reverse-causal relationship, or the effects of other variables. b. may not have a direct effect on firm performance. d.has weakened the effect of other governance mechanisms. c. executive compensation systems. a. shareholders in the large institutional firms listed on the New York Stock Exchange. a. a. going to actively defend their firm from takeover attempts. d. The firing by President Obama of the CEO of General Motors because the board had failed to act in previous years. a. greater experience in a wider range of industries, lessening of managerial employ-ment risk Given global interest in the effects of board gender diversity and the availability of abundant data on board gender composition and firm performance, many researchers have investigated the topic. c. salary. a. a golden parachute. c. determined by the size of the firm. Our evidence is consistent with Sah and Stiglitz. 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. c. safer strategies with more focused diversification for the firm. c. CalPERS supports generous stock option plans for executives because it motivates under-performing executives. The board has been successful in reducing the percentage of CEO pay that is com-posed of stock options. a. ownership concentration. b. small; large Meta-analyses linking team gender diversity to team performance (e.g., Bell et al., 2011) reach much the same conclusion as meta-analyses linking board gender diversity to firm performance that is, the relationship between team gender diversity and team performance is tiny. Ownership concentration is determined by both 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. Knowledge at Wharton is an affiliate of the Wharton School of the University of Pennsylvania. Other things being equal, market analysts may, consciously or unconsciously, regard all-male boards as more competent than boards that are more gender-diverse. b. appoint another individual as chairperson of the Board of Directors. Are there further consequences for firm performance if females join a firms upper echelons? International Food Services (IFS) has a contract with the Marines to supply meals for its troops in Iraq and other foreign assignments. a. the roles of CEO and chairperson of the board of directors are usually combined. Which of the following is FALSE about corporate governance in China? One suggested explanation for this puzzling finding is that the stock market is biased and believes that women are not as competent when making business decisions. d. penalties for inadequate firm performance. Its hard to get much closer to zero. This suggests that gender diversity on the board explains about two-tenths of 1% of the variance in company performance. 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. require Mr. Leagreet to personally certify the firm's financial reports. Historically, ____ have been at the center of the German corporate governance structure. a. equivalent c. defense tactics vary in their effectiveness as a defense to takeovers. b. the addition of outside directors to the board. d.Traditionally privately-owned Japanese firms are going public. Interviewees who felt that their boards reflected this quality explained how all board members were able to speak openly and ask questions at meetings and, in doing so, they felt that all opinions were respected. c. 50 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. c. the board is homogenous in composition. For a board comprised of lawyers, this might mean adding an engineer and a sociologist in the mix. a. banks a. defense tactics are usually beneficial for the executives of the target firm. b. requiring that outside directors be former executives of the firm. Monitoring by shareholders is usually accomplished through Combined, the board members held seats on 47 corporate boards in the U.S. across a variety of industries. the board includes employees as voting members.c. b. stock brokerage companies. Of course not. 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. The CEO and the top executives successfully fended off the takeover and are concentrating on strategies to improve the performance of the firm. b. typically under-performing their industry. d. reduce the size of the stock option package provided to Mr. Leagreet. c. the banks owing the largest shares of stock in the firm. "In Japan, the principal source of the active monitoring of large companies comes from: "Generally, a board member who is a source of information about a firm's day-to-day activities is classified as a(an) ____ director. b. d.reflected in the price of the stock. 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. a. some foreign firms have delisted on U.S. stock exchanges. c. Institutional investors disapprove of long-term executive incentive plans and they may sell their blocks of stock in CamCell. a. determine and control the strategic direction of an organization, so that the top executives are focused on maximizing corporate profits. 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. "A virtually exclusive reliance on financial controls may occur when outsider-dominated boards exist. a. lead independent Based on these findings, we worked with Mike Fucci, 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. The separation between firm ownership and management creates a(n) ____ relationship. b. Japanese firms will have little interest in Mr. Abercrombie's specialty because these skills are already practiced at a high level. b. internal controls have failed. c. the manager's supervisory needs are lowered, the manager is allowed greater time to oversee a wider range of activities The CEO would pick up the phone frequently and connect us., Whoever is leading the board also has the responsibility of ensuring that quieter board members speak up in board meetings. the CEO is also the chairperson of the board of directors.b. She shared, I can understand what it means to be a token person. Stallman Company took a physical inventory on December 31 and determined that goods costing $200,000 were on hand. c. the employees directly involved in the wrongdoing Indeed, this is what Post and Byrons meta-analysis showed. b. Corporate governance mechanisms sometimes fail to monitor and control top man-agers' decisions. But academic research says otherwise. Mr. Abercrombie has had striking success in reducing conflict and hostility among directors and allowing boards to develop more cohesiveness. a. 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. EXCEPT "If the market for corporate control were efficient as a governance device, then only ____ would be targets for takeovers. b. increased diversification of the firm. a. management structures related to total quality management systems. a. c. lower It signals an end, or at least the beginning of an end, to gender exclusivity in firm leadership. "The major determinant of CEO pay is(are): d. reduction in R&D expenditure. d.The compensation committee may not have comprehensive firm performance data. c. German firms will not be interested in Mr. Abercrombie''s services because the German system of decision-making is based on authority and few conflicts emerge. c. the board is homogenous in composition. shipping point, and $22,000 of goods sold to Alvarez Company for$30,000, f.o.b. Access more than 40 courses trusted by Fortune 500 companies. What other expenses might it expect? They are more a function of general market conditions. c. financial institutions such as mutual funds and pension funds that control large-block shareholder positions. d. a poison pill. d. always outperforming their industry. Generally, a board member who is a source of information about a firm's day-to-day activities is classified as a(an) ____ director. performance of boards of directors and how various studies have tackled this challenge. d. a system of cross-shareholding among firms. For example, Norway, Spain, France, and Iceland all have laws requiring that women comprise at least 40% of boards at publicly listed companies. y=2x+8;y=12;1x2. d.governmental relations. 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. a. going to actively defend their firm from takeover attempts. b. the board includes employees as voting members. Evidence that board diversity benefits firms, however, has been mixed. b. internal auditing scrutiny has improved and there is greater trust in financial report-ing. 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. Research suggests that boards of directors perform better if c. opportunity In order to limit Mr. Leagreet's power, Board of Directors plans to: b. higher b. the total revenue of the firm. The average correlation is .15. Evidence that board diversity benefits firms is mixed. b. defense tactics are opposed by institutional investors. the board is homogenous in composition. c. greenmail. ____ is an important influence in Japanese corporate governance structures. d. the board of directors. Both the Pelzer purchase and the Alvarez sale were in transit at year-end. c. elevation of foreign executive compensation to U.S. levels. In a study of 1,069 leading firms across 35 countries and 24 industries, we found that gender diversity relates to more productive companies, as measured by market value and revenue, only in . a. provides unified leadership and direction for the firm. d. reduction in R&D expenditure. b. increasing the concentration of ownership of large U.S. firms. "Boards of directors are now becoming more involved in: Conventional wisdom says gender diversity in the corporate boardroom improves company performance. a. the firm is overpriced in the market. "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. "All of the following statements are TRUE about the use of defense tactics by the target firm during a hostile takeover EXCEPT: Her research examines how people manage multiple identities, boundaries, and inclusion in organizations while navigating any tensions associated with doing so. Many commentators suggest that gender diversity in the corporate boardroom improves company performance because of the different points of view and experience it offers. Klein is also the vice dean of the Wharton Social Impact Initiative. "Managers in the U.S. receive ____ compensation than managers in the rest of the world. 106. b. a. increases shareholder value significantly. 48 c. salary. a. monitoring "International Food Services (IFS) has a contract with the Marines to supply meals for it troops in Iraq and other foreign assignments. His current boards are shifting to a different approach: a process of assessment where you periodically look at the skill sets that you would ideally want on the board, given the business its in, and then the skill sets you have, and you identify any missing.
