COLLEGE OF THE IMMACULATE CONCEPTION 2nd Year BSA

Senior High School Department QUIZ #1

Socially Responsible Leaders Making a January 22, 2020
Difference

Name: ____________________________________________________ Score: ________________

ACCED 16: GOVERNANCE, BUSINESS ETHICS, RISK MANAGEMENT

AND INTERNAL CONTROL
(Introduction to Corporate Governance)

Part 1. MULTIPLE CHOICE

Identify which term is being described by each statement. Choose your answer from the
box below. Write the letter of your answer, in PRINT, in the space provided before each
number.

A. Board of Directors G. Bonding Costs O. Management

B. Fairness H. Level of Effort P. Governance
C. Understandable I. Stakeholders' Theory R. Corporate Governance
D. Agency Conflict K. Clarity S. Costs of Monitoring
E. Agency Theory L. Equality T. Independent Director
F. Shareholders M. Executive Director

____1. As to stockholders, this means that all stockholder should receive fair treatment
from the directors.
____2. Their main responsibility is to make decisions related to the operations of the
business.
____3. They are the highest governing body in a corporation and are responsible in the
monitoring and control of the business and its operations.
____4. It is the system by which the governing body sets direction and controls the
company’s management to maintain the interest of its stakeholders.
____5. It refers to the differences in the interests of owners and managers.
____6. According to the theory of Jensen and Meckling, unless they own shares, their
main interest is likely to be the size of their remuneration package and their
status to the company.
____7. According to agency theory, these people are concerned more on the long-term
profitability and increase in their wealth.
____8. This may arise from different interest of managers, level of effort, and
financial prospects against the shareholders.
____9. This theory states that the purpose of corporate governance should be to satisfy
the objectives of employees, investors, major suppliers and creditors, customers,
the government, local communities and the general public.
____10.It is structure through which the objectives of the company are set, and the
means of obtaining these objectives and monitoring performance.
____11.Introduced by Jensen and Meckling, this theory suggests that there is separation
of ownership and control of the business is the reason for the need of
governance.
____12.As distinguished from transparency, this refers to the way the information is
being communicated with clarity and comprehension.
____13.These are board of directors neither part of the management nor an employee of
the company.
____14.They are the agents of the corporation.
____15.It is the system of stewardship and control to guide organizations in fulfilling
their long-term economic, moral, legal and social obligations towards their
stakeholders.
____16.These costs arise from establishing system of control over the management to
ensure that management is acting in the best interests of the owners.
INTRODUCTION TO CORPORATE GOVERNANCE page 2

Part 2. TRUE OR FALSE

Read each statement carefully. Write T if the statement is incorrect and write F if
otherwise. Any form of erasures will be marked incorrect.
____1. Shareholders are concerned not only about short-term profits and dividends but
they are even more concerned about long-term profitability.
____2. Managers may work less hard than they would if they were the owners of the
company. The effect of this lack of effort could be smaller profits and a lower
share price.
____3. One of the approaches in reducing agency problems is making the board of
directors more effective at monitoring the decisions of the executive management.
____4. Issues in corporate governance include ethical conduct and corporate social
responsibility.
____5. Securities and Exchange Commission supervises the corporate governance of
companies in the Philippines.

Part 3. ENUMERATION (write in print, any form of erasures will be marked incorrect)
(a) Ways in which agency conflicts arise
1.
2.
3.
4.

(b) Principles in corporate governance

1.
2.
3.
4.

(c) Benefits of having good corporate governance

1.
2.
3.
4.
5.

(d) Basic objectives of corporate governance

1.
2.
3.
4.

(e) Key issues in corporate governance

1.
2.

– End of Examination -
– jmls