d.outsidedirectors ownsignificantequityintheorganization. 2023 Knowledge at Wharton. "The governance mechanism most closely connected with deterring unethical behaviors by holding top management accountable for the corporate culture is: Managerial employment risk is the 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. d. always outperforming their industry. 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. So, existing findings could reflect a causal relationship, a reverse-causal relationship, or the effects of other variables. a. firms with unethical top executives The chapter Opening Case suggests that ___________ is (are) frequently blamed for high CEO pay during periods where corporate performance has been poor. b. government auditors. a. going to actively defend their firm from takeover attempts. If so, how and when? She said, Having a diversity on the board does not just mean having a bunch of CEOs or a bunch of capitalists.Having board members with different roles whether its a CIO or a CTO or you know independent board directors that come from a different background is really good. "The argument for having one individual serve as CEO and chairperson of the Board of Directors is that this: a. lead independent The governance mechanism most closely connected with deterring unethical behaviors by hold-ing top management accountable for the corporate culture is Research suggests that boards of directors perform - Course Hero Consensus Corporate governance revolves around the relationship between which two parties? c. the board is homogenous incomposition. Can you catch two birds with one stone? The impacts of nominating a. used to diversify the firm. a. Mr. Abercrombie has had striking success in reducing conflict and hostil-ity among directors and allowing boards to develop more cohesiveness. d.Traditionally privately-owned Japanese firms are going public. a. the firm's free cash flow. d. riskier strategies with greater diversification for the firm. Our foremost conclusion is that there is no cumulative, zero-order evidence of long-term performance declines for firms that have more females in their upper echelons (as CEOs or TMT members). Japanese keiretsu are 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. a. Mr. Abercrombie will have a large market in Japan because the culture highly val-ues consensus decision making. Other things being equal, market analysts may, consciously or unconsciously, regard all-male boards as more competent than boards that are more gender-diverse. Also discuss the following: How will the company justify the travel costs? 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). c. excessive management compensation. b. strengthening the internal management and accounting control systems d.the board of directors. a. available to comment to external analysts. They also raised. This plan will be very attractive in luring candidates for the CEO position. Annual U.S. beer production data is given below. 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. 5. mechanics and neural control of contraction, Information Technology Project Management: Providing Measurable Organizational Value, John David Jackson, Patricia Meglich, Robert Mathis, Sean Valentine. d.governmental relations. d. government agencies. a. this delays their compensation for present actions to future years. "Product diversification provides two benefits to managers that do not accrue to shareholders: ____ and ____. If these dynamics occur within corporate boards, boards may not take full advantage of their own cognitive variety. "An agency relationship exists when one party delegates: 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. d. Section 404 creates excessive costs for firms. a. some foreign firms have delisted on U.S. stock exchanges. 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. Couple times it hasnt been but someone will just say, Hey thats not very respectful, you know the way you just said that., Several interviewees told us that boards that value open communication are more likely to engage in conversations about diversity even those that believe they still have a long way to go. a. a golden parachute. Five or so years after the financial crisis, the pressure on boards and directors to raise their game remains acute. Post and Byron (2015) found that firms with more female directors tend to have slightly higher accounting returns, such as return on assets and return on equity, than firms with fewer female directors. The New York Stock Exchange requires that the audit committee be The benefits of having a socially and professionally diverse board cannot be realized without an egalitarian board culture. The relationship between CEO gender and long-term company performance is statistically significant, the authors find, but tiny. Archibald Smith has moved from an upper-middle management job at Chromatic Array, Inc., to a similar position with Pixilair Corporation. a. c. used to reduce corporate debt. b. increase the price of the firm's stock, increase the dividends paid out from free cash flows A growing body of research including studies by McKinsey & Company has proven that companies with more women in senior executive and board roles have advantages over those that dont.. c. agency When executives have ownership positions or stock options with their employing firm, they are Which of the following statements is most likely to be TRUE? b. 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. Hostile takeover attempts are so common that they do not reflect negatively on the firm's performance. Corporate governance and board effectiveness 2.0 - ResearchGate They are more a function of general market conditions. c. defense tactics are typically ineffective in deterring the takeover. Working in a group, discuss how the New Therapy Company can meet the deadline and still ensure a high quality of care. d. incentive. Legislation, codes of conduct, and guidelines have been developed to improve corporate governance. A recent study, of board composition and financial data on 1,644 public companies in the United States between 1998 and 2011, finds that companies that appoint women to the board are no more profitable than those that do not. b. risk undertaken by managers to earn stock options. For example, companies with more than 30 percent . If the market for corporate control were efficient as a governance device, then only ____ would be targets for takeovers. "Top executives resist tying their compensation to long-term performance of the firm mainly because: Stallman Company took a physical inventory on December 31 and determined that goods costing $200,000 were on hand. Do companies with women on the board perform better than companies whose boards are all-male? Research suggests that firms with ____ perform better, especially when collaboration among top management team members is important. a. going to actively defend their firm from takeover attempts. "Shareholder value is: The CEO of Alta Corp. is dismayed by a lack of effort and insights his directors provide during board meetings. 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. d. The compensation committee may not have comprehensive firm performance data. The team members are becoming concerned about the security of their jobs at Sierra Infusion. 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. Evidence that board diversity benefits firms, however, has been mixed. All of the following are unintended consequences of the Sarbanes-Oxley Act EXCEPT: You know people listen. d. governmental relations. 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. 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. d.Mr. Find the area bounded by the graphs of the indicated equations over the given intervals (when stated). 1. c. lower levels of product diversification. The Sarbanes-Oxley Act requires all of the following EXCEPT: 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. EXCEPT "Usually, large block shareholders are considered to be those shareholders with at least ____ percent of the firm's stock. a. negatively related to: d. potential tax burden for. c. equally as common as data values close to the mean. Our evidence is consistent with Sah and Stiglitz. Firms should be selecting the very best directors from the largest talent pool possible, and excluding women from that pool to avoid market penalties would be counterproductive. b. the board includes employees as votingmembers. c. reduce the risk of total firm failure, reduce their total portfolio risk One shared: I have some influence, and Im trying to exert my influence.. Who is ultimately responsible for the corporate climate that resulted in this wrongdoing? b. riskier strategies with more focused diversification for the firm. d.internal auditing costs have increased by about one-third. 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The CEO genuinely seeks their greater involvement. d. establishing and using formal processes to evaluate the board's performance. According to the excerpt, how do production processes affect the comparative advantage of the United States? Which of the following statements is about corporate governance in Germany is FALSE? c. is so aggressive that boards of directors have become overly cautious. Ditto for studies of the gender diversity of the top management team. One explained raising issues around diversity in the leadership pipeline and his desire to make this a higher board priority: One of our board members who is African-American came up to me afterwards and said, Thank you for bringing that up because I brought it up years ago, not so delicately, and nothing ever happened. So, hes like, Maybe if we get more of us looking at this, itll move the needle., Others similarly commented on the need to serve as a champion for diversity and inclusion on their boards if they wanted to keep the topic front and center. a. monitoring Research following the resource dependence theory generally expects boards to have a positive effect on firm performance by engaging in the resource provision function, as doing so the firms to benefit from directors' human capital and social capital in value creation ( Haynes and Hillman, 2010; Jiang et al., 2020 ). c. the government. The board has been successful in reducing the percentage of CEO pay that is com-posed of stock options. 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. c. large block shareholders such as mutual funds and pension funds. Of course not. d.a variety of compensation plans for execu-tives of foreign subsidiaries. Executive compensation is a governance mechanism that seeks to align managers' and owners' interests through all of the following EXCEPT d. ownership of a company to a second party. b. But firms expecting a financial performance boost simply by increasing female board representation may end up disappointed. c. elevation of foreign executive compensation to U.S. levels. d. the proportion of insiders on the board of directors. In a normal distribution, data values farther from the mean are The average correlation between board gender diversity and firm market performance (such as stock performance, shareholder returns) was even smaller and was not statistically significant. The authors conclude the following: Undoubtedly, breaking the glass ceiling matters. An executive's decisions often affect firm performance only over the long run. b. a standstill agreement. c. increased shareholder participation in decision making. Yet, the answers have not been clear or consistent. a. usually on the verge of bankruptcy. 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 Evidence that board diversity benefits firms is mixed. d. reduction in R&D expenditure. At a meeting over dinner, the top management team agrees to go to the board of directors with a proposal for: a. moving toward having directors from different backgrounds a. mandating that all outside directors be drawn from government or academia rather than industry. a. d. banks. Besides the name of the director, the press releases were identical. Nor are they any less profitable, for that matter. a. increases shareholder value significantly. In research over the last five years, we found that only 24 percent of the boards of companies listed in the US and having over $1 billion in revenues were digitally savvy, and that these companies outperformed the others in our research on key metrics. b. a poison pill. a. moving toward having directors from different backgrounds A 2015 meta-analysis of 140 research studies of the relationship between female board representation and performance found a positive relationship with accounting returns, but no significant relationship with market performance. b. executive compensation that is primarily based on long-term performance. Agricultural Chemicals, Inc., was the target of a hostile takeover six months ago. b. decreases. a. setting the option strike price substantially higher than the current stock price. "The interests of multinational corporations' shareholders may be best served when there is: a. firms with unethical top executives d. a poison pill. p:p:p: The temperature is 9090^{\circ}90. Shareholder value is In the U.S., the fundamental goal of business is to, In the U.S., a firm's key stakeholder(s) is(are) the. d. the difference in risk propensity between owners and managers. d. reduce the size of the stock option package provided to Mr. Leagreet. 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. 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. 5 Mary-Hunter (Mae) McDonnell is an assistant professor of management at the Wharton School of the University of Pennsylvania where she conducts research on the topics of non-market strategy and corporate governance. d.Individualism. The board has been successful in reducing the percentage of CEO pay that is composed of stock options. a. the strategic decision making process. Idea diversity is also important., To offset these concerns, some boards are ensuring that skills and expertise, along with demographics, are front and center in their recruiting processes. The argument is that women differ from men in their knowledge, experiences, and values and thus bring novel information and perspectives to the board. d. more variable, The longer the focus of managerial incentive compensation, the greater the ____ top-level man-agers. A majority of the directors are concerned that while Mr. Leagreet has been responsible for the firm's earning above-average returns, that he has been displaying a tendency toward personal extravagance at the firm's expense. d. the opportunity for higher compensation through firm growth, a reduction in managerial employment risk. d.made up of CPAs with auditing experience. c. public pension funds Even if the women named to corporate boards are different from the men on these boards, they may not speak up in board conversations and they may lack the influence to change the boards decisions. Cultivate trust and encourage the board to be involved in strategy. a. management consultants. b. CamCell may have to over-compensate its CEO in order to offset the personal risk a CEO would undertake under this plan. b. returned to them as dividends. c. private shareholders rarely have large ownership positions in the firm. c. strategy implementation actions to functional managers. Institutional owners are d.establishing and using formal processes to evaluate the board's performance. We found no difference in the perceived competence of Marilyn and Jack, which was not surprising given their identical bios. "Boards of directors are now becoming more involved in: As ownership of the corporation is diffused, shareholders' ability to monitor managerial deci-sions d.requiring that outside directors be truly objective by having no ownership interest in the firm. c. pressure the board of directors to reprice their stock options. But research conducted by consulting firms and financial institutions is not as rigorous as peer-reviewed academic research. a. used to diversify the firm. b. institutional shareholders The compensation of top executives of Chinese companies is closely related to pri-or and current financial performance of the firm. c. excessive management compensation. b. the board includes employees as voting members. Even if women who are named to corporate boards are different from the men on these boards and even if the women do speak up and influence board decision-making, their influence may not be consistently positive (or consistently negative, for that matter). Some major Japanese firms are bringing in more outsiders onto their boards of directors. d. greater concentration on Sierra's core industry. d. is eliminated. d.is less expensive than maintaining two top executives. The CEO's behavior may be indication of: d.The compensation committee may not have comprehensive firm performance data. And to the extent investors care about shareholder value, they will penalize those companies they suspect are putting other goals first. Which of the following is NOT an internal governance mechanism? d. reduce their employment risk, increase the company's value, Agency costs reflect all of the following EXCEPT ____ costs. b. more common than data values close to the mean. Diversity, Inclusion, and Belonging Course. 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. The decisions made by top-level managers are typically complex and nonroutine. The best way to get the board to trust the executive team is to keep them involved. Consider two recent meta-analyses that have been conducted to summarize prior research on the topic. The modest size of the positive effects helps explain ambiguity and inconsistency in prior scholarship (past research has been triangulating on a weak signal in a noisy field), and they caution against overclaiming about strong or causally dependable financial benefits (Eagly, 2016). a. ATP has been the initiator of several hostile takeovers in the last two years. Managers in the U.S. receive ____ compensation than managers in the rest of the world. c. not correlated with Combined, the board members held seats on 47 corporate boards in the U.S. across a variety of industries. This seems unlikely. Mr. Abercrombie is considering expanding his consulting practice overseas. We find that companies that appoint women to the board see a decline in their market value for two years following the appointment (after which we no longer see any effect). 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. The research literature includes over 100 studies of firms in 35 countries and five continents (Post and Byron, 2015). d.consulting accounting advisors to make sure that the plan transfers wealth to the CEO without immediately appearing on the balance sheet of CyberScope. d.75. b. control Klein is also the vice dean of the Wharton Social Impact Initiative. d. over-valued firms. And the greater the cognitive diversity, the better the board is at solving complex problems and coming up with novel solutions. 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. b. the board of directors of IFS "Recent research evidence shows that ownership concentration is associated with: Consequently, the board has decided on an incentive plan that involves payout based on the firm's performance five years in the future. a. high executive turnover. b. inside 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. d. likely to be terminated by the acquiring firm even in a friendly takeover. 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. b. may not have a direct effect on firm performance. b. CamCell may have to over-compensate its CEO in order to offset the personal risk a CEO would undertake under this plan. Older boards are better boards, so beware of diversity targets a. greenmail. c. the board is homogenous in composition. a. boards of directors. a. decision making responsibility to a second party. | Brian Berkey. German executives are not dedicated to the maximization of shareholder value largely because c. the board is homogenous in composition. The CEO and the top executives successfully fended off the takeover and are concentrating on strategies to improve the performance of the firm. b. may not have a direct effect on firm performance. On January 1, California law said that all locally headquartered publicly traded companies must have at least one female director by 2020.
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