2.02 FP2 Factors That Influence Corp Governance

What does corporate governance involve according to the definition provided?

• A set of relationships between a company's customers, suppliers, and competitors

• A set of relationships between a company's management, its board, its shareholders, and other stakeholders

• A set of legal requirements for financial reporting

• A set of marketing strategies for corporate branding

What is the main focus of corporate governance?

• Maximizing shareholder wealth

• Preventing corporate collapses such as the Enron collapse

• Promoting employee welfare

• Ensuring customer satisfaction

What is one of the aims of corporate governance in a multinational corporation like Apple Inc.?

• To ensure that the company operates independently of any stakeholders, including investors and customers.

• To define relationships between a company's management, its board, shareholders, and other stakeholders, ensuring accountability and transparency.

• To decrease the company's transparency to its shareholders, making its operations more secretive.

• To limit the company's objectives and the ways to achieve them, focusing only on short-term gains.

What does corporate governance recognize as important for long-term success?

• The value of minimizing business ethics and corporate awareness.

• The importance of ignoring society interests and reputation.

• The significance of short-term financial gains over ethical considerations.

• The value of business ethics and corporate awareness of society interests to reputation and long-term success.

Imagine a scenario where a company decides to implement strong Corporate Governance practices. What is one of the benefits it could experience?

• Decreased access to external finance.

• Higher costs of capital.

• Improved company performance – sustainability.

• Increased risk of corporate crisis and scandals.

How does Corporate Governance affect a firm's evaluation?

• It has no impact on firm evaluation.

• It decreases firm evaluation.

• It increases firm evaluation and share performance.

• It increases only the share performance.

Imagine a scenario where a company decides to improve its Corporate Governance practices. What impact does this have on the company's capital costs?

• It increases interest rates on loans.

• It has no effect on the costs of capital.

• It increases the difficulty of getting loans.

• It lowers costs of capital – interest rates on loans.

How can Corporate Governance help a multinational company like Apple Inc.?

• By reducing the risk of increased competition.

• By reducing the risk of corporate growth.

• By reducing the risk of corporate crisis and scandals.

• By reducing the risk of market fluctuation.

What was the Cadbury report a result of?

• Changes in corporate law

• Several high profile company collapses

• New government policies

• Financial market reforms

What was the main focus of the Cadbury Report's recommendations?

• To increase corporate profits

• To arrange company boards and accounting systems

• To lessen corporate governance risks and failures

• To adopt European Union standards