Corporate Responsibility 1st Edition Argenti Test Bank

Corporate Responsibility 1st Edition
Argenti Test Bank

Visit to Download in Full: https://testbankdeal.com/download/corporate-responsibility-
1st-edition-argenti-test-bank/
Instructor Resource
Argenti, Corporate Responsibility
SAGE Publications, 2016.
Chapter 6: Responsible Corporate Governance
Test Bank
Multiple Choice
1. The traditional model of corporate governance was established in the 1919 Dodge v. Ford
Motor Company decision that established all of the following EXCEPT
*a. corporations are made responsive to the rights and wishes of stakeholders.
b. A business corporation is organized and carried on primarily for the profit of the stockholders.
c. The powers of the directors are to be employed for that end.
d. The discretion of directors is to be exercised in the choice of means to attain that end .
Cognitive Domain: Knowledge
Answer Location: pg. 199-200
Question Type: MC
2. The landmark decision of ________________ established the foundation for the model of
corporate governance that would dominate the business landscape until the start of the 21st
century.
a. Ford v. General Electric Company
b. Dodge v. Willhelm
c. Wilhelm v. General Electric Company
*d. Dodge v. Ford Motor Company
Question Type: MC
3. The changing definition of corporate governance has shifted since the early 1900s to go
beyond _____________
a. the twin goals of social justice and profit maximization.
*b. the singular goal to maximize profits.
c. satisfy stakeholders.
d. national market domination.
Cognitive Domain: Comprehension
Question Type: MC
4. Publicly traded companies are required to have _____________

a. a code of ethics.
b. CEO, COO, CFO and Chief Ethics Officer.
*c. an active board of directors.
Instructor Resource
d. a 12-member board of directors.

Answer Location: pg. 200
Question Type: MC
5. The board of directors is often referred to as all of the following EXCEPT

*a. board of determinants.
b. board of governors.
c. board of managers.
d. board of trustees.
Question Type: MC
6. An organization’s board is a body of _________ individuals who cooperatively oversee a

company, institution, or organization.
a. appointed
b. elected
c. senior
*d. appointed or elected
Question Type: MC
7. An organization or company’s ________typically establish the specific duties, powers, and

responsibilities for a board of directors.
a. corporate policy
b. regulations
c. standards
*d. bylaws
Question Type: MC
8. A company’s bylaws detail all of the following EXCEPT

*a. board effectiveness measures.
b. the size of the board.
c. the selection process for members.
d. a schedule of required board meetings.
Question Type: MC
9. _________is a director who is a high-ranking employee, large shareholder, or other individual

who is intimately connected to the organization.
a. An outside director
Instructor Resource
*b. An inside director

c. The senior director
d. The affiliated director
Cognitive Domain: Application
Question Type: MC
10. In the United States, typical inside directors include all of the following EXCEPT
*a. union representatives.
b. chief executive officers.
c. major shareholders.
d. representatives of other stakeholders.
Cognitive Domain: Analysis
Question Type: MC
11. An outside director is a member of the board who is not employed or engaged with the
company. These individuals ___________
*a. serve as a source of outside counsel on strategy, operations, and performance.
b. represent stakeholders.
c. are often governmental agency representatives.
d. represent unionized groups.
Question Type: MC
12. There are a consistent set of responsibilities across most boards that can be categorized into
three major categories?
a. Operational oversight; risk management/accountability; and intermediate recruitment,
performance, and compensation
*b. Operational oversight; risk management/accountability; and executive recruitment,
performance, and compensation
c. Operational oversight; risk management/accountability; and executive support
d. Regulatory oversight; business plan management/accountability; and executive support
Question Type: MC
13. _______________ making it difficult to ensure proper board oversight; meanwhile, the lack
of accountability for board members who foster executive misbehavior limits incentives to
blow the whistle.
a. Executives and directors often spy on each other’s boards and directors
b. Executives and directors are often not familiar with the industry and others may employ
directors’ firms in a consulting capacity that distracts proper oversight
Instructor Resource
*c. Executives and directors often sit on each other’s boards, and directors’ firms may be
employed by the CEO’s company in a consulting capacity
d. Executives and directors are often not familiar with the industry and others may employ
directors’ firms in a consulting capacity that distracts proper oversight
Question Type: MC
14. University of New Hampshire Professor of Finance Fred Kaen argues that risk management
and risk management products help ensure the survival of the firm and thereby support broad
public policy objectives _________________
a. that too often harm those of shareholder wealth maximization.
b. in line with a narrow financial objective of shareholder wealth maximization.
c. that only fit the immediate interests of the owners of the company and a narrow financial
objective of shareholder wealth maximization.
*d. beyond the immediate interests of the owners of the company and a narrow financial
objective of shareholder wealth maximization.
Question Type: MC
15. Top executives and board members often place ________________ above the overall good
of the corporation, with disastrous results.
*a. immediate gains and individual interests
b. low-yield gains and social interests
c. immediate credit and individual pride
d. long-term good intentions and individual beliefs
Question Type: MC
16. The board cannot be involved in ___________; however fulfilling its responsibility for
controlling risk means that directors must ensure that those within the corporation who are
tasked with creating and implementing risk management procedures are doing so in line with
the board’s corporate strategy.
a. strategic decisions
*b. day-to-day risk management
c. organizational vision
d. management oversight
Question Type: MC
17. Critical functions of the board of directors with regard to corporate governance include all of
the following regarding the chief executive officer, except
a. hiring,
Instructor Resource
*b. career building,

c. compensation decisions,
d. performance review,
Question Type: MC
18. For large publicly traded companies, a _______________ is typically established to review
and approve the compensation packages of top executives.
a. benefits committee
*b. compensation committee
c. CFO
d. team of senior board members
Question Type: MC
19. According to the text, four crises most important in the evolution of corporate governance
include all of the following EXCEPT
a. Enron Corporation.
b. Worldcom.
c. Tyco International.
*d. Fannie Mae & Freddie Mac
Question Type: MC
20. On December 2, 2001, Enron Corporation declared bankruptcy as a result of long-standing

and methodical ___________that substantially overstated the financial position and earnings
of the business.
a. regulatory fraud
*b. accounting fraud
c. money laundering
d. fiscal neglect
Question Type: MC
21. Arthur Andersen, ___________________, dissolved as a result of a dramatic loss of its

customers due to its apparent auditing failures associated with the company.
a. Enron CEO
b. Enron’s marketing firm
*c. Enron’s accounting auditor
d. Enron CFO
Instructor Resource
Question Type: MC
22. The Enron scandal called into question the effectiveness of the traditional model of corporate
governance and __________________________
a. the relationship of stakeholders with the board of directors and external auditors.
b. the relationship of stakeholders with the board of directors and external clients.
c. the relationship of corporate executives with the board of directors and competing firms.
*d. the relationship of corporate executives with the board of directors and external auditors.
Question Type: MC
23. Both Tyco International CEO Kozlowski and Tyco’s CFO Mark Swartz Swartz were
ultimately indicted on multiple charges of _____________
a. criminal neglect.
b. fiduciary maleficence.
c. greensharing.
*d. fraud and corruption.
Question Type: MC
24. Both Tyco International CEO Kozlowski and Tyco’s CFO Mark Swartz were found guilty of
stealing more than _______ from Tyco International and were sentenced to lengthy prison
terms.
a. $15 million
*b. $150 million
c. $50 million
d. $550 million
Question Type: MC
25. Tyco’s former board member Frank Walsh pled guilty to charges that he had devised a
scheme _____________ in the CIT Group acquisition.
*a. to hide the fees he received
b. to increase the cost
c. conceal profits by TYCO
d. to hide executive salaries
Question Type: MC
Instructor Resource
26. As Gary Strauss commented in his USA Today piece titled “Tyco Events Put Spotlight on
Directors’ Role,” “Tyco directors’ lack of awareness about events surrounding criminal
charges against CEO Dennis Kozlowski underscores __________________ that plagues
many company boards.”
*a. the lax oversight of management
b. the paucity of effective pay systems
c. the overbearing profit oversight
d. the lax oversight of market conditions
Question Type: MC
27. Lax board oversight for WorldCom included all of the following EXCEPT
a. the audit committee “rarely scratched below the surface” of financial reports.
*b. committees engaged in each other’s roles.
c. compensation matters were usually 'decided by the CEO rather than the compensation
committee.
d. committees did not engage in their intended roles.
Question Type: MC
28. A 17-month recessionary period that began in 2007 has come to be known as the
______________
a. Bush Recession.
b. Obama Recession.
*c. Great Recession.
d. Financial Sector Recession.
Question Type: MC
29. The 2007-2012 financial crisis resulted in all of the following EXCEPT
a. the collapse of a major investment bank.
b. mortgage foreclosures on millions of homes.
*c. greater governmental transparency.
d. a severe decline in global stock markets.
Question Type: MC
30. Equity markets both in the United States and abroad tumbled; in January 2008, world equity
markets suffered a _____________ loss, according to Standard & Poor’s.
a. $500 billion
b. $25 trillion
*c. $5.2 trillion
Instructor Resource
d. $50.2 billion
Question Type: MC
31. The Financial Crisis Inquiry Commission issued a report in 2011 that identified
_______________ as a principal cause of the 2007 recession.
*a. governance failures
b. regulatory failures
c. board arrogance
d. stakeholder interference
Question Type: MC
32. All of the following EXCEPT _______________ relate to the Sarbanes-Oxley Act of 2002.
a. the act contains 11 titles that were intended to set new standards for U.S. public accounting
firms, public company boards, and executive management
b. requires senior executives to take individual responsibility for the completeness and accuracy
of corporate financial reports
*c. added no new costs to firms related to compliance
d. outlines the interaction between corporate audit committee members and external auditors,
setting civil penalties and forfeiture of benefits for noncompliance
Question Type: MC
33. In his book New Corporate Governance, corporate governance expert Martin Hilb suggests
“There are just two basic types of corporate governance,” ____________
a. Anglo-American style which focuses on the interest of all stakeholders and the relationship-
based model which focuses on maximizing shareholder value.
*b. Anglo-American style which focuses on maximizing shareholder value and the relationship-
based model which focuses on the interest of all stakeholders.
c. right and wrong.
d. American and European.
Question Type: MC
34. The Corporate Governance Report issued by the United Nations Global Compact stated in
2009 that “A new vision of business is emerging—one where a set of core values,
encompassing all of the following EXCEPT ________________, guide the board’s
oversight, relationship with management, and accountability to shareholders.”
a. human rights
b. environmental protection
c. anti-corruption measures
Instructor Resource
*d. social justice

Question Type: MC
35. In the wake of public bailouts executed for the automotive and financial services industries to
stabilize the national and global economies during the Great Recession, there was intense
public outcry at ________________________________ at firms who received bailout funds.
a. the lack of productivity
b. poor allocation of resources
c. profit margins
*d. the compensation received by executives
Question Type: MC
36. In the U.S., the median CEO pay package rose _________________ in 2013.
a. above $100 million
*b. above $10 million
c. above $30 million
d. above $20 million
Question Type: MC
37. The term _________________ was used primarily to describe the compensation and benefits
received by executives as a result of a merger or takeover.
*a. golden parachute
b. golden reward
c. fair-sharing
d. merger-gain
Question Type: MC
38. A golden parachute is typically __________________ that guarantees the executive

significant severance benefits in the event that the executive loses his or her job as a result of
termination, firm restructuring, or even planned retirement.
a. a board policy
b. a requirement by the SEC
c. a clause in a merger or takeover contract
*d. a clause in an executive’s employment agreement
Question Type: MC
Instructor Resource
39. Benefits from a golden parachute can be all of the following EXCEPT
a. cash.
b. healthcare.
*c. immunity.
d. the accelerated vesting of stock options.
Question Type: MC
40. Shifts in perspective on corporate governance are especially susceptible to ____________

a. economic booms and large corporate mergers.
b. social complacency.
c. profitable events such as corporate mergers and economic booms.
*d. catastrophic events such as corporate scandals and economic downturns.
Question Type: MC
True or False
41. The Cadbury Commission, a group formed in 1992 to consider the financial aspects of
corporate governance, defined corporate governance in its simplest form as the process and
systems by which companies are directed and controlled. This definition still accurately fits
today.
a. True
*b. False
Question Type: TF
42. The members of a board of directors are referred to as directors of the corporation.
*a. True
b. False
Question Type: TF
43. Board members often have incentives to look the other way when CEOs abuse corporate
funds.
*a. True
b. False
Question Type: TF
Instructor Resource
44. Corporate governance now has the power to affect events far beyond the corporate
boardroom as local markets shift and merge into a global economy and as increased
globalization enables one country’s recession to initiate a domino effect around the world.
*a. True
b. False
Question Type: TF
45. A study by the University of Florida found that highly paid CEOs result in higher
profitability for their companies as opposed to executives in similar roles paid more modest
salaries.
*a. True
b. False
Question Type: TF
Essay
46. In a 1992 article titled “The Corporate Board: Confronting the Paradoxes,” Ada Demb and
Friedrich Neubauer defined corporate governance as “the process by which corporations are
made responsive to the rights and wishes of stakeholders.” This definition is incomplete; what
questions are still raised or not well defined by this definition?
*a. How are corporations made responsive? And to what rights and wishes is the corporation to
be made responsive? And perhaps most important, who are the stakeholders of a business?
Question Type: ESS
47. What are the four crises that are most important in the evolution, according to the text, of
corporate governance?
*a. Enron Corporation, Tyco International, Worldcom, and the 2007 financial crisis?
Question Type: ESS
48. Name and describe the law passed in 2010 that addresses golden parachutes.
*a. The Dodd-Frank Act passed in 2010 contains a clause that mandates a shareholder vote on
any future adoptions of golden parachutes for executives of publicly traded firms.
Question Type: ESS
49. What do critics of Sarbanes-Oxley contend?

Instructor Resource
*a. The law is both ineffective and too burdensome. A December 2008 Wall Street Journal
editorial argued, “The new laws and regulations have neither prevented frauds nor instituted
fairness. But they have managed to kill the creation of new public companies in the U.S., cripple
the venture capital business, and damage entrepreneurship.”
Question Type: ESS
50. In the wake of the 2007 financial crisis, focus on executive compensation included actions by
the SEC and congress such as?
*a. The SEC requested that publicly traded companies disclose information detailing how
executives’ compensation amounts are decided. Additionally, the SEC began posting
compensation amounts on its website for investors and the public. The United States Congress
also began to act on executive compensation by including in the stimulus bill of 2009 a specific
clause that limited the bonuses of all executives who worked at firms receiving government
assistance to no more than one third of the executive’s annual compensation.
Question Type: ESS

Corporate Responsibility 1st Edition Argenti Test Bank

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Corporate Responsibility 1st Edition Argenti Test Bank

Uploaded by

Copyright:

Available Formats

Corporate Responsibility 1st Edition

Argenti Test Bank

Chapter 6: Responsible Corporate Governance

4. Publicly traded companies are required to have _____________

d. a 12-member board of directors.

5. The board of directors is often referred to as all of the following EXCEPT

6. An organization’s board is a body of _________ individuals who cooperatively oversee a

7. An organization or company’s ________typically establish the specific duties, powers, and

8. A company’s bylaws detail all of the following EXCEPT

9. _________is a director who is a high-ranking employee, large shareholder, or other individual

*b. An inside director

*b. career building,

20. On December 2, 2001, Enron Corporation declared bankruptcy as a result of long-standing

21. Arthur Andersen, ___________________, dissolved as a result of a dramatic loss of its

*d. social justice

38. A golden parachute is typically __________________ that guarantees the executive

40. Shifts in perspective on corporate governance are especially susceptible to ____________

49. What do critics of Sarbanes-Oxley contend?

You might also like