Research suggests that firms with ____ perform better, especially when collaboration among top management team members is important. One interviewee said, The lead director has a role here to make sure that they invite people in and if somebody is really quiet they should go to that personand make sure they feel comfortable saying anything that they want.. a. defense tactics are usually beneficial for the executives of the target firm. The repurchase at a premium of shares of stock that have been acquired by the aggressor firm in a hostile takeover in exchange for an agreement that the aggressor will no longer target the com-pany for takeover is called Why might the stock market react negatively to increases in board diversity? Hed speak like, without taking any breaths for two hours on end., But even in hierarchical cultures, the CEO, Chairman, or lead director can help to create a more open communication environment. This is in fact what we found. Diversity wins is the third report in a McKinsey series investigating the business case for diversity, following Why diversity matters (2015) and Delivering through diversity (2018). b. institutional shareholders a. available to comment to external analysts. a. high executive turnover. Managers in the U.S. receive ____ compensation than managers in the rest of the world. a. ATP has been the initiator of several hostile takeovers in the last two years. a. earnings potential for: By and large, the obverse is true: breaking glass helps firms slightly. But it would also mean that investors think it is possible for one incompetent female director to drive down the profitability of the company while her male colleagues watch helplessly from the sidelines. Measuring Board of Director Performance: An Overview and - Emerald a. a. decision making responsibility to a second party. c. CEOs and CFOs must personally certify the company's financial reports. d. tying the compensation of CEOs to measurable financial criteria. c. CalPERS supports generous stock option plans for executives because it motivates under-performing executives. a. Our interviewees suggested that social diversity (e.g., gender, race/ethnicity, and age diversity) and professional diversity are both important for increasing the diversity of perspectives represented on the board. 5 Despite persistent efforts to tackle underrepresentation of women on corporate boards, most boardrooms remain mostly male. In Japan, the principal source of the active monitoring of large companies comes from "Shareholder value is: a. the firm's free cash flow. Post and Byron (2015) synthesized the findings from 140 studies of board gender diversity with a combined sample of more than 90,000 firms from more than 30 countries. This plan will be very attractive in luring candidates for the CEO position. d. The firm is traded on the New York Stock Exchange and must change its corporate governance to comply with the NYSE's new rules. We also asked them to evaluate the competence of the new board member. d. Banks have less influence on the governance of German corporations than they do on U.S. corporations. b. firms earning above-average returns The CEO's behavior may be indication of: Board gender diversity thus explains about 1% of the variance in companies engagement in CSR. d.potential tax burden for. "Research suggests that the activism of institutional investors such as TIAA-CREF and CalPERS: d.outsidedirectors ownsignificantequityintheorganization. The Vorstand (management board) of a German corporation makes decisions about strategy and management. What amount should Stallman report as its December 31 inventory? Research suggests that firms with ____ perform better, especially when collaboration among top management team members is important: A primary objective of corporate governance is to: Which of the following is a FALSE statement about corporate governance? b. inside This seems unlikely. d. Section 404 creates excessive costs for firms. 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. a. negatively related to: b. insuring that the strike price value of the options can be lowered if the organiza-tional environment becomes more risky. a. bonuses. a. bonuses. c. salary. a. reasonably compensating a CEO. It is worth noting that gender diversity in other kinds of work teams is not significantly positively related to performance, either. Diversity doesnt matter as much on boards where members perspectives are not regularly elicited or valued. b. a standstill agreement. At a meeting over dinner, the top management team agrees to go to the board of directors with a proposal for b. the market for corporate control. Collegial boards are more likely to accept and integrate differences of opinion. An executive's decisions often affect firm performance only over the long run. b. increased diversification of the firm. (Statistical significance depends in part on sample size. d. the board of directors. Innovation The CEO of Alta Corp. is dismayed by a lack of effort and insights his directors provide during board meetings. a. the firm is overpriced in the market. a. banks d. the board of directors. a. generate free cash flows, reduce the risk of total firm failure The Chinese governance system has been moving towards the Western model in recent years. "The New York Stock Exchange requires that the audit committee be: Researchers studied 1,644 public companies. d.incentive. Chapter 10 (Multiple Choice) Flashcards | Quizlet (2020) finds that firms with older boards perform better than those with younger boards in terms of ROA. "There is some evidence that performance bonuses for executives based on annual results are ____ investments in R&D where the firm was highly diversified. a. usually on the verge of bankruptcy. Here, I dig into the findings of rigorous, peer-reviewed studies of the relationship between board gender diversity and company performance. 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. b. There have been many rigorous, peer-reviewed studies of board gender diversity. a. high executive turnover. All of the following are unintended consequences of the Sarbanes-Oxley Act EXCEPT: 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. We merged our data on board composition and firm financials with social performance ratings from KLD STATS, an index for socially responsible investing. a. management consultants. b. stock brokerage companies. c. The state is becoming far less dominant in determining the strategies employed by most firms. Companies with a Digitally Savvy Board Perform Better d. consulting accounting advisors to make sure that the plan transfers wealth to the CEO without immediately appearing on the balance sheet of CyberScope. b. may not have a direct effect on firm performance. What would you recommend? Consequently, the board is: Why Investors React Negatively to Companies That Put Women on Their Boards a. going to actively defend their firm from takeover attempts. d. incentive. c. The CEO was never held responsible for his unethical actions. a. mandating that all outside directors be drawn from government or academia rather than industry. c. the number of outside directors and the parties they represent. d. the opportunity for higher compensation through firm growth, a reduction in mana-gerial employment risk. Consequently, the board has decided on an incentive plan that involves payout based on the firm's performance five years in the future. Nor do they perform worse. d. ownership of a company to a second party. This plan will be very attractive in luring candidates for the CEO position. b. And to the extent investors care about shareholder value, they will penalize those companies they suspect are putting other goals first. a. d. likely to be terminated by the acquiring firm even in a friendly takeover. We discovered that firms that had made investments in other diversity initiatives, such as work-life benefits, LGBT policies, and programs to employ disabled workers, suffered a greater stock market penalty for appointing female directors than companies that had no previous track record of promoting diversity. a. a. risk that managers will behave opportunistically. For example, a few years ago, Apples shareholders voted against recruiting more minorities to its top management team, after the company argued that such a measure would be overly restrictive. "Product diversification provides two benefits to managers that do not accrue to shareholders: ____ and ____. While new to the U.S., mandates to increase gender diversity on corporate boards are common elsewhere. Write the statements in symbolic form . a. safer strategies with greater diversification for the firm. the board is homogenous in composition. On analysis of the literature, we found a systematic review of non-exhaustive literature on corporate governance (ownership structure and board of directors) and firm innovation (Gonzales-Bustos & Hernndez-Lara, 2016) as well as a theoretical review on the topic (Asensio-Lpez et al., 2019).However, as far as we know, there are no prior studies on the specific association between the board . b. Can you catch two birds with one stone? The impacts of nominating c. Research shows that once a hostile takeover has been defeated, the firm is safe from other hostile takeover attempts for many years. All rights reserved. They increase the boards cognitive variety. The greater a boards cognitive variety, the theory goes, the more options it is likely to consider and the more deeply it is likely to debate those options. b. the appointment by EasyJet of a new chairman of the board It might be unconscious bias. The Vorstand of a German corporation makes decisions about organization direction and management. b. increase the price of the firm's stock, increase the dividends paid out from free cash flows a. the director of food service for IFS. Consensus One interviewee commented on how the board as a whole believed in the importance of diversity, but longer-term board members still struggled to understand its value. Hostile takeover attempts are so common that they do not reflect negatively on the firm's performance. One interviewee talked about the importance of respectful disagreement, acknowledging mishaps in communication, and in valuing different perspectives: I havent had anybody shut me down or shut other people down. a. c. often performing above their industry averages. Which of the following statements is true? b. CamCell may have to over-compensate its CEO in order to offset the personal risk a CEO would undertake under this plan. b. the board of directors of IFS. Managerial employment risk is the Many popular press articles and fund managers make this claim, citing studies by consulting firms, information providers and financial institutions, such as McKinsey, Thomson Reuters and Credit Suisse. Who is ultimately responsible for the corporate climate that resulted in this wrongdoing? a. b. institutional shareholders c. gives the Board of Directors more power. 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. Which of the following statements is about corporate governance in Germany is FALSE? d. reflected in the price of the stock. Boards of directors are now becoming more involved in - Course Hero d.requiring that outside directors be truly objective by having no ownership interest in the firm. d.riskier strategies with greater diversification for the firm. 5 Mr. Abercrombie has had striking success in reducing conflict and hostility among directors and allowing boards to develop more cohesiveness. On January 1, California law said that all locally headquartered publicly traded companies must have at least one female director by 2020. Seven. a. management structures related to total quality management systems. 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. A virtually exclusive reliance on financial controls may occur when outsider-dominated boards exist. But academic research says otherwise. Increased regulation in the financial sector has increased the cost of mounting hos-tile takeovers. c. salary. One board member shared: We look at diversity in a lot of different ways experience, age, ethnicity, gender, etc.. For a board comprised of lawyers, this might mean adding an engineer and a sociologist in the mix. c. pressure the board of directors to reprice their stock options. Alternatively, work by Raaj Sah and Joseph Stiglitz suggests that diversity moderates group decisions. "The argument for having one individual serve as CEO and chairperson of the Board of Directors is that this: Corporate governance and board effectiveness 2.0 - ResearchGate b. risk undertaken by managers to earn stock options. b. accounting firms are forbidden from providing both auditing and consulting services to clients. a. ATP has been the initiator of several hostile takeovers in the last two years. d. re-invested in additional corporate assets. The fact that a hostile takeover has occurred is proof that the firm was under-performing. destination. The compensation of top executives of Chinese companies is closely related to pri-or and current financial performance of the firm. d. reduction in R&D expenditure. a. b. risk undertaken by managers to earn stock options.