Chapter 11

Corporate responsibility refers to

• the basic values and beliefs of a company

• the structure of the board

• the commitment of the business to its stakeholders

• the principles for the governance structure

Which of the following is NOT characteristic of a bank-based financial system?

• Bank and businesses have close relationship

• Households are risk avoidance

• Banks are highly concentrated and integrated

• Households have great access to housing

In ABC plc, the chairman is Jonathan, and the CEO is his daughter. All the dỉrectors receive bonuses based on annual profits. The company’s sales are made by individual salespeople who routinely bypass the company’s strict credit check procedures, which leads to several irrecoverable debts. From this information, what are the likely corporate governance issues at ABC plc:

• Domination by a small group; Emphasis on short-term profitability; Lack of supervision of employees.

• Emphasis on short-term profitability

• Lack of supervision of employees

• Dominant by a small group

Which of the following is NOT the perspective on corporate governance

• Customer perspective

• Public policy perspective

• Stewardship perspective

• Stakeholder perspective

In good corporate governance, monitoring and judging directors’ performance based on the returns that the company has achieved under their stewardship ensures:

• Interest of managers

• Management accountability

• Management openness

• Management ethics

In the country of Zanadu, the population has a risk seeking attitude towards financial matters. Zanadu's financial system is likely to be:

• a market-based system

• a stakeholder system

• a public policy system

• a bank-based system

The agency problem concerns the misalignment in interests and conflicts of interest between:

• regulators and professional bodies

• banks and financial markets

• directors and shareholders

• government and industry

Corporate governance of a company in which CFO hide bad debts face the problem of

• Misleading financial statements and information

• Inadequate control function

• Lack of supervision

• Domination by a small group

Which of the following is a list of the five key elements of good corporate governance?

• Board of directors, senior management, shareholders, external auditors, internal auditors

• Board of directors, senior management, employees, external auditors, internal auditors

• Senior management, stakeholders, external auditors, internal auditors, government regulators

• Senior management, shareholders, employees, external auditors, internal auditors

Good practice in corporate governance requires that openness and transparency should be supported by:

• judging performance of directors on the basis of return on investment

• reconciling the interests of shareholders and directors

• reducing the potential for conflicts of interest

• disclosure of information