Governing the Corporation Globally Quiz-11

Which of the following is true regarding CEO duality?

• From an agency theory standpoint, if the board is to supervise agents such as the CEO, it seems imperative that the board be chaired by the same individual.

• In US firms with CEO duality, the trend now is to appoint a lead independent director, who chairs the sessions held by outside directors that do not involve company executives.

• A corporation led by two top leaders—a board chairperson and a CEO—will at least have unity of command and experience less top-level conflict.

• Firms in the UK are more likely to combine the two top jobs than are firms based on the US.

Family ownership and control of large firms may:

• reduce incentive for a focus on long-term performance.

• maximize conflicts between owners and managers.

• lead to destruction of value as a result of conflict.

• promote the selection of more-qualified managers.

The service aspect of the role that boards of directors perform is to:

• challenge managerial decisions.

• advise the CEO.

• protect shareholder interests.

• approve managerial actions.

In light of industry-based considerations, governance practices need to:

• follow universal best practices.

• increase the number of outside directors for firms in high-growth turbulent industries.

• create a fit with the nature of the firm’s industry.

• move toward CEO duality in slow-growth stable industries.

The primary reason that agency problems persist is:

• poor stewardship on the part of principals.

• poor delegation on the part of agents.

• information asymmetries.

• desire for empire building.

In corporate governance, most small shareholders:

• attend annual shareholder meetings.

• have strong incentives to monitor how the firm is being run.

• prefer to free ride and hope other shareholders monitor manager behavior.

• rarely hold stock for a long period of time.

In recent years, which of the following is one of the factors that has led to the increased prevalence of shareholder capitalism?

• The global concentration of best practices

• The impact of globalization.

• The decline of capitalism

• The rise of CEO duality

Managers from a controlling family who divert resources from the firm for family or personal use have engaged in:

• stewardship.

• expropriation.

• CEO duality.

• cross-listing.

In recent years, CEO duality has:

• been banned for firms operating in the United States.

• increased worldwide from 12% of firms in 2002 to 48% in 2010.

• become a less common practice among firms around the world.

• decreased based on conclusive research evidence showing it is less effective than nonduality.

Approximately 80 percent of which of the following has diffused ownership?

• Start-up firms

• Family-owned firms

• State-owned firms

• Listed US firms