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Fam Bus Mgmt > Ch 5 > Flashcards

Ch 5 Flashcards

1
Q

What is governance

A

System of structures rights, and obligations for directing and controlling corporations

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2
Q

What does the the distribution of rights and responsibilities do

A

Specifies how the board of directors, managers, and shareholders share power in a firm

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3
Q

What is the mechanism for monitoring

A

Governance aims to align stakeholder interests a create value

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4
Q

What makes up the internal governance mechanism

A

Board of directors, concentrated ownership,and performance based-pay

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5
Q

What does the board of directors do?

A

Monitors and advises managers in a company

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6
Q

What do blockholders do in a concentrated ownership?

A

Ensure efficient management of the firm

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7
Q

What does performance- based pay do for managers and owners

A

Aligns their interests

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8
Q

What makes up the external governance mechanism

A

Product Market competition, managerial labor market, and threat of takeover

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9
Q

What exactly does the product market competition do to firms and products

A

Outcompetes underperforming firms and products

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10
Q

What exactly does the managerial labor market do for the managing staff

A

Replaces underperforming managers with more competent ones

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11
Q

What is the threat of takeover

A

Makes underperforming firms easy takeover targets

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12
Q

What are the main motivational points of family owners

A

①financian goals ② indiversitied wealth ③ supervise managers

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13
Q

What is the reality of the functionality of traditional governance mechanisms in terms of family firms

A

The board of directors, concentrated ownership, and performance based-pay have limited effectiveness

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14
Q

What are the main specific governance problems in family firms

A

①altruism-induced ② owner nadir ③ majority-minority owner ④ family blockholder governance problems

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15
Q

What is the problem with altruism
Induced governance

A

Family owners favor family members over hinfamily members- leading to adverse selection and shirking

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16
Q

In family firms, what is the problem with
Owner holdup governance

A

Family owners steer the firms Ina particularistic way exposing non family employees to risks

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17
Q

What exactly is the governance problem: majority - minority

A

Disagreements between majority and minority owner about goons , and information access

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18
Q

What occurs when there are family blackhader governance problems

A

Family owners disagree about strategy and influence within the organization

19
Q

What do governance constellations mean in terms of family firms?

A

The different ownership and management structures

20
Q

When ownership and management is shared among family members

A

Owner-manager

21
Q

When ownership and management is shared among siblings

A

Sibling partnership

22
Q

When the ownership of business is shaved among cousins

A

Cousin consortium

23
Q

What dynamic is it when extended family controls portfolio of business activities

A

Family enterprise

24
Q

How are the performance implications of governance constellations measured? (Relationship) hint: certain shape

A

U-shaped relationship between family governance constellation and financial performance

25
Q

What does corporate governance instill

A

Efficient cooperation of board members, managers, and shareholders

26
Q

What must one look for when choosing the correct people for their board of directors?

A

Skills, communication, managerial skillset, knowledge, and motivation

27
Q

What are the roles and involvement of the board of directors?

A

① appoint, monitor, and dismiss top management ② invoke general assembly ③ set dividend policy ④ review business strategy

28
Q

What exactly is the board’s involvement in the strategy formation process

A

① before broad direction ② offers advice ③ monitors strategic plans actual execution

29
Q

What exactly does ownership governance legally define (ownership aspects)

A

① voting rights ②stalemates ③ transfer of shares ④ dissolution of agreements

30
Q

What does family governance secure in matters related to the firm

A

Efficient operation of the family

31
Q

The family values and Goals defines

A

Core values, overarching goal, family membership sand valves about being in business

32
Q

Family involvement in management determines family members’

A

Positions, qualifications, career paths, and termination

33
Q

What does family involvement in ownership specify or need specification in

A

Ownership strategy, in-laws and non-family managers as owners, trust ownership, and ownership requirements

34
Q

What does family involvement in new entrepreneurial activity do?

A

Supports next-generational family member’s entrepreneur endeavors

35
Q

What does family involvement in philanthropy support?

A

Family members in need and education or just other philanthropic activities

36
Q

What does wealth governance do in family firms

A

Organizes and monitors the management of family wealth

37
Q

When a family has no coordination of interests amongst family members in regards of managing wealth - they become known as the

A

Uncoordinated family

38
Q

In an embedded family office, who manages wealth within the family firm

A

Fiduciary (trusted individual)

39
Q

In a single family office, who manages family wealth?

A

Distinct organizational entity

40
Q

What happens when a family trust or foundation is made

A

Wealth is allocated (in a trust/foundation) for the benefit of family members

41
Q

What governance document emotionally binds family members to joint governance of business, ownership, family and wealth

A

Family charter

42
Q

Family assembly is comprised of or comprises

A

Family members

43
Q

Family council is what

A

Governs family affairs

44
Q

What does integrated governance in family firms align and integrate?

A

Governance in the areas of family, ownership, corporate and wealth

Fam Bus Mgmt (3 decks)

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