CHAPTER 2 Flashcards
Directors who, though not really employed by the corporation, handle the legal or insurance work for the company or are important suppliers
affiliated director
A theory stating that problems arise in corporations because the agents (top management) are not willing to bear responsibility for their decisions unless they own a substantial amount of stock in the corporation.
agency theory
A range of the possible degree of involvement by the
board of directors (from low to high) in the strategic management process.
board of directors’ continuum
Commonly agreed obligations of directors, which include: setting corporate strategy, overall direction, mission or vision; hiring and firing the CEO and top management;
controlling, monitoring, or supervising top management; reviewing and approving the use of resources; and caring for shareholder interest
board of director responsibilities
The relationship among the board of directors, top management, and shareholders in determining the direction and performance of a corporation.
corporate governance
The obligation of board members to closely monitor and evaluate top management.
due care
The directing of activities toward the accomplishment of corporate objectives
executive leadership
An officer or executive employed by a corporation who serves on that company’s board of directors; also called
management director
inside director
A condition that occurs when two firms share a director or when an executive of one firm sits on the board of a second firm.
interlocking directorate
Members of a board of directors who are not employees of the board’s corporation; also called non–management directors
outside director
Legislation passed by the U.S. Congress in 2002 to promote and formalize greater board independence and
oversight
Sarbanes-Oxley Act
A theory proposing that executives tend to be more motivated to act in the best interests of the corporation than in their own self-interests.
stewardship theory
A description of what the company is capable of becoming.
strategic vision
Leadership tasks that involve getting things accomplished
through and with others in order to meet the corporate objectives
top management responsibilities
A leader who causes change and movement in an organization by providing a strategic vision.
transformational leader
