MODULE 2- CORPORATE GOVERNANCE

Question 1

refers to the relationship of BOD, Top management and Shareholders in determining the direction and performance of the corporation

Answer 1

CORPORATE GOVERNANCE

Question 2

RESPONSIBILITIES OF BOARD OF DIRECTORS

Answer 2

1. Setting corporate strategy, overall direction, mission, or vision
2. Hiring and firing the CEO and top management
   3.Controlling, monitoring, or supervising top management
3. Reviewing and approving the use of resources
4. Caring for shareholder interests

Question 3

ROLE OF THE BOARD IN STRATEGIC MANAGEMENT

Answer 3

1. Monitor
2. Evaluate and influence
3. Initiate and determine

Question 4

By acting through its committees, a board can keep abreast of developments inside and outside the corporation, bringing to management’s attention developments it might have overlooked. A board should at the minimum carry out this task.

Answer 4

MONITOR

Question 5

A board can examine management’s proposals, decisions, and actions; agree or disagree with them; give advice and offer suggestions; and outline alternatives. More active boards perform this task in addition to monitoring.

Answer 5

EVALUATE AND INFLUENCE

Question 6

A board can delineate a corporation’s mission and specify strategic options to its management. Only the most active boards take on this task in addition to the two previous ones.

Answer 6

INITIATE AND DETERMINE

Question 7

DEGREE OF INVOLVEMENT IN STRATEGIC MANAGEMENT

Answer 7

1. PHANTOM
2. RUBBER STAMP
3. MINIMAL REVIEW
4. NOMINAL PARTICIPATION
5. ACTIVE PARTICIPATION
6. CATALYST

Question 8

Never knew what to do; if anything, no degree of involvement

Answer 8

PHANTOM

Question 9

Permits officer to make all decisions. It votes as the officers recommended on action issues

Answer 9

RUBBER STAMP

Question 10

Formally reviews selected issues that officers brings to its attention

Answer 10

MINIMAL REVIEW

Question 11

Involved to a limited degree in the performance or review of selected key decisions, indicators, or programs of management

Answer 11

NOMINAL PARTICIPATION

Question 12

Approves, questions, and make final decisions on mission, strategy, policies, and objectives. Has active board committees. Performs fiscal and management audits

Answer 12

ACTIVE PARTICIPATION

Question 13

Takes the leading role in establishing and modifying the mission, objectives, strategy, and policies. It has a very active strategy committee

Answer 13

CATALYST

Question 14

(sometimes called management directors) are typically officers or executives employed by the corporation.

Answer 14

Inside directors

Question 14

MEMBERS OF A BOARD OF DIRECTORS

Answer 14

1. INSIDE DIRECTORS
2. OUTSIDE DIRECTORS

Question 15

(sometimes called non-management directors) may be executives of other firms but are not employees of the board’s corporation.

Answer 15

Outside directors

Question 16

THEORIES ABOUT INTERNAL & OUTSIDE BOD

Answer 16

1. Agency Theory
2. Stewardship Theory

Question 17

states 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. The theory suggests that a majority of a board needs to be from outside the firm so that top management is prevented from acting selfishly to the detriment of the shareholders.

Answer 17

Agency Theory

Question 17

proposes that, because of their long tenure with the corporation, insiders (senior executives) tend to identify with the corporation and its success. Rather than use the firm for their own ends, these executives are thus most interested in guaranteeing the continued life and success of the corporation.

Answer 17

Stewardship Theory

Question 18

NOMINATION AND ELECTION OF BOARD MEMBERS

Answer 18

In the past, CEOs of companies could choose who they wanted to be on their board of directors and shareholders usually agreed

many companies now use a nominating committee to suggest new board members for shareholders to vote on

Question 18

the inclusion of a corporation’s workers on its board

Answer 18

CODETERMINATION

Question 18

The new Code has sixteen (16) principles that are distributed among five (5) main sections, namely:

Answer 18

Principles 1-7: Board’s Governance Responsibilities
Principles 8-11: Disclosure and Transparency
Principles 12: Internal Control System and Risk Management Framework
Principles 13: Cultivating a Synergic Relationship with Shareholders
Principles 14-16: Duties of Stakeholders

Question 18

INTERLOCKING DIRECTORATES

Answer 18

1. direct interlocking directorate
2. indirect interlock

Question 18

occurs when two firms share a director or when an executive of one firm sits on the board of a second firm.

Answer 18

direct interlocking directorate

Question 18

occurs when two corporations have directors who also serve on the board of a third firm

Answer 18

indirect interlock

Question 19

ROLE OF TOP MANAGEMENT

Answer 19

(1) provide executive leadership and a strategic vision and
(2) manage the strategic planning process.

Question 20

the directing of activities toward the
accomplishment of corporate
objectives.

Answer 20

EXECUTIVE LEADERSHIP

Question 21

a description of what the company is
capable of becoming.

It is often communicated in the
company’s mission and vision
statement

Answer 21

STRATEGIC VISION

Question 22

Transformational leaders who provide change and movement in an organization by providing a vision for that change

Answer 22

1. Oprah Winfrey
2. Barack Obama
3. Nelson Mandela
4. Steve Jobs

Question 23

THREE KEY CHARACTERISTICS OF A TRANSFORMATIONAL LEADERS

Answer 23

1. The CEO articulates a strategic vision for the corporation
2. The CEO presents a role for others to identify with and follow
3. The CEO communicates high-performance standards and also shows confidence in the followers’ abilities to meet these standards