c. Research shows that once a hostile takeover has been defeated, the firm is safe from other hostile takeover attempts for many years. "One means that is considered to improve the effectiveness of outside directors is: b. the addition of outside directors to the board. "If the market for corporate control were efficient as a governance device, then only ____ would be targets for takeovers. d. The CEO and top executives should not consider their jobs secure. In sum, the research results suggest that there is no business case for or against appointing women to corporate boards. the board includes employees as voting members.c. It might be unconscious bias. A 2015 meta-analysis of 140 research studies of the relationship between female board representation and performance found a positive relationship with accounting returns, but no significant relationship with market performance. a. safer strategies with greater diversification for the firm. Its worth noting that even if the meta-analyses revealed a stronger relationship between board gender diversity and firm performance, we couldnt conclude that board gender diversity causes firm performance. The ownership of major blocks of stock by institutional investors have resulted in all of the fol-lowing EXCEPT b. composed solely of outside directors. d. risk managers will not find a new top management position if they should be dis-missed. Ditto for studies of the gender diversity of the top management team. Writing recently on Huffington Post, for example, one consultant observed the following: Companies with gender-diverse management teams have been proven to consistently perform better and be more profitable than those without them. d. large; large. "The interests of multinational corporations' shareholders may be best served when there is: b. d.reduce their employment risk, increase the company's value, Agency costs reflect all of the following EXCEPT ____ costs. They prefer to start from a position of trust. "The board of directors of CyberScope, Inc., is designing a stock option plan for its CEO that will motivate the CEO to increase the market value of the firm. The decisions made by top-level managers are typically complex and nonroutine. For instance, they found that boards with diverse directors in key positions tended to perform better, suggesting that there was no quality issue involved in the lack of appropriate representation. d.Traditionally privately-owned Japanese firms are going public. c. remains constant. b. the board includes employees as voting members. b. ensure that the interests of top-level managers are aligned with the interests of shareholders. "Given the demands for greater accountability and improved performance, which of the following is NOT a voluntary change many boards of directors have initiated? Collegial boards are more likely to accept and integrate differences of opinion. b. inside a. defense tactics are usually beneficial for the executives of the target firm. c. CEOs and CFOs must personally certify the company's financial reports. Given the findings of research on board gender diversity, one might wonder about the effects on company performance of CEO gender and top management team gender diversity. The board of directors and firm innovation: A meta-analytical review When and Why Diversity Improves Your Board's Performance c. focusing attention on ineffective boards of directors. d.This type of plan is likely to cause the CEO to underinvest in R&D in order to boost CamCell's long-term profitability. c. an increased number of IPOs (initial public offerings) are expected. But our research suggests that shifting the diversity discourse away from gender to other dimensions of expertise and experience might, in fact, help women and other underrepresented groups for example, instead of saying we have appointed a female director the focus should be we have appointed an expert on China. With less emphasis on gender, female appointments might one day no longer be perceived as checking a social performance box, and signal nothing about firm preferences other than its commitment to hiring the best people for the job. d. Individualism. b. risk undertaken by managers to earn stock options. Our evidence is consistent with Sah and Stiglitz. b. increase the price of the firm's stock, increase the dividends paid out from free cash flows a. bonuses. This is because women bring new insights and perspectives and increase the cognitive diversity of the board. When executives have ownership positions or stock options with their employing firm, they are Write the statements in symbolic form . Institutional Investors on Boards: Does Their Behavior Influence Research suggests that boards of directors perform better if Executive compensation is a governance mechanism that seeks to align managers' and owners' interests through all of the following EXCEPT Many of our interviewees suggested that their boards had made progress on gender diversity but not on other forms of social diversity such as race, nationality, and age. c. lower d.government agencies. The directors are all outsiders, experienced, and run their own successful firms. Institutional Directors: Types. a. defense tactics are usually beneficial for the executives of the target firm. a. used to diversify the firm. Knowledge at Wharton is an affiliate of the Wharton School of the University of Pennsylvania. We dont know and cannot know. shipping point, and $22,000 of goods sold to Alvarez Company for$30,000, f.o.b. a. some foreign firms have delisted on U.S. stock exchanges. b. may not have a direct effect on firm performance. So, a tiny effect is statistically significant if the sample is big enough.). The relationship was statistically significant suggesting it wasnt a chance effect but it was tiny. d. is eliminated. a. moving toward having directors from different backgrounds "Japanese keiretsu are: Boards Need To Up Their Game In Terms Of Cognitive Diversity - Forbes "There is some evidence that performance bonuses for executives based on annual results are ____ investments in R&D where the firm was highly diversified. d.is eliminated. Which of the following is FALSE about corporate governance in China? His current boards are shifting to a different approach: a process of assessment where you periodically look at the skill sets that you would ideally want on the board, given the business its in, and then the skill sets you have, and you identify any missing. b. insuring that the strike price value of the options can be lowered if the organiza-tional environment becomes more risky. c. 50 A business journal from the Wharton School of the University of Pennsylvania. Cultivate trust and encourage the board to be involved in strategy. b. increased diversification of the firm. b. the total revenue of the firm. "Managers in the U.S. receive ____ compensation than managers in the rest of the world. "Institutional owners are: Sometimes, its laziness. Still, given all the studies of board diversity and company performance that have been conducted to date, it seems very unlikely that new research will reveal a strong, clear relationship between board diversity and company performance. Am-brose received "Shareholder value is: We then gave the participants a list of 10 corporate goals and asked them how much they thought the company cared about each of them. The governance mechanism most closely connected with deterring unethical behaviors by hold-ing top management accountable for the corporate culture is d. dependent. Which of the following is NOT an internal governance mechanism? It is therefore not much of a leap to assume companies appoint female directors as part of a diversity initiative. b. strengthens the governance processes of the firm. "The governance mechanism most closely connected with deterring unethical behaviors by holding top management accountable for the corporate culture is: d.the board of directors. This will have no effect on the stock option plan design discussion, because CalPERS' main concern is stock dividends. "Recent research evidence shows that ownership concentration is associated with: It would be wrong to say that we are 100% of where we ought to be. a. greater experience in a wider range of industries, lessening of managerial employ-ment risk a. mandating that all outside directors be drawn from government or academia rather than industry. b. likely to gain financially if their employing firm is taken over by another. c. requiring outside directors to own significant equity stakes in the firm. b. control c. determined by the size of the firm. d. of the focus on stewardship-management in German firms rather than the financial performance focus of U.S. firms. "A virtually exclusive reliance on financial controls may occur when outsider-dominated boards exist. b. d. The gap in compensation between CEOs in public and private companies is in-creasing. b. a. some foreign firms have delisted on U.S. stock exchanges. One interviewee commented on how the board as a whole believed in the importance of diversity, but longer-term board members still struggled to understand its value. The argument is that women differ from men in their knowledge, experiences, and values and thus bring novel information and perspectives to the board. b. internal controls have failed. In contrast to managers' desires, shareholders usually prefer that free cash flows be Access more than 40 courses trusted by Fortune 500 companies. a. increases. The slow progress on gender diversity has frustrated policymakers, industry groups, and institutional investors, many of whom have publicly advocated for inclusion of women and minorities among the top ranks of management. c. the laxity of institutional investors. a. d.Mr. d.CEOs and other top executives tend to hold their jobs for five years or less, meaning they are not employed by the firm for the appropriate period of time. This is in line with numerous academic studies that have found little to no evidence supporting the idea that board diversity leads to better financial performance. the board is homogenous in composition. What circumstances would most likely have initiated this proposal? c. having the stock option plan designed by insiders on the board of directors who are familiar with day-to-day operations of the firm. b. executive compensation that is primarily based on long-term performance. b. small; large a. c. the firm's top managers. b. d. the proportion of insiders on the board of directors. Which of the following is most likely to be TRUE? Stephanie Creary is an assistant professor of management and organizational behavior scholar at the Wharton School of the University of Pennsylvania. "The separation between firm ownership and management creates a(n) ____ relationship. Nor do they perform worse.. a. a golden parachute. destination. Let Some research suggests, for example, that gender-diverse boards make fewer acquisitions than all-male boards (. "Usually, large block shareholders are considered to be those shareholders with at least ____ percent of the firm's stock. The Vorstand is elected by the firm's employees. d.greater concentration on Sierra's core industry. a. the director of food service for IFS. Chapter 10 (Multiple Choice) Flashcards | Quizlet Women board directors are more likely than men to identify social issues like human rights, climate change, and income inequality as critical to corporate strategy. a. the strategic decision making process. The market for corporate control serves as a means of governance when Mr. Abercrombie is considering expanding his consulting practice overseas. "All of the following statements are TRUE about the use of defense tactics by the target firm during a hostile takeover EXCEPT: a. firms with unethical top executives The number of women among them? c. The CEO/Chairperson of the Board has been suspected of opportunistic behavior. c. lobby legislators to pass laws that are aligned with the organization's interests. Klein is also the vice dean of the Wharton Social Impact Initiative. Idea diversity is also important., To offset these concerns, some boards are ensuring that skills and expertise, along with demographics, are front and center in their recruiting processes. Research has found little to no evidence supporting the idea that companies with female board directors perform better than companies run by all-male boards. d.internal auditing costs have increased by about one-third. They are more a function of general market conditions. Using meta-analytic techniques, we have uncovered findings that help to settle some of those answers. a. the firm's free cash flow. It is not because companies perform worse after they appoint female directors. d.more variable. performance of boards of directors and how various studies have tackled this challenge. According to the excerpt, how do production processes affect the comparative advantage of the United States? "The major determinant of CEO pay is(are): b. more common than data values close to the mean. This wouldnt be a problem if diversity initiatives were not seen by many investors as little more than costly experiments. Which of the following statements is most likely to be TRUE? It is worth noting that gender diversity in other kinds of work teams is not significantly positively related to performance, either. d. consulting accounting advisors to make sure that the plan transfers wealth to the CEO without immediately appearing on the balance sheet of CyberScope. 2010).These studies generally focus on institutional investors as shareholders (Roberts and Yuan 2006), and when they do address the role of . c. having the stock option plan designed by insiders on the board of directors who are familiar with day-to-day operations of the firm. b. internal controls have failed. c. the firm's tax issues. c. crossing the palm with silver. Research suggests that the activism of institutional investors such as TIAA-CREF and CalPERS The correlation is .03. Boards of directors are now becoming more involved in "In contrast to managers' desires, shareholders usually prefer that free cash flows be: d. the number of outside directors and total percentage of shares they own. The board of directors of CamCell, Inc., wishes to design a CEO compensation plan that will align the personal interests of the CEO with the interests of the shareholders in long-term firm performance. James Abercrombie has a thriving consulting firm specializing in training boards of directors in decision-making skills. The average correlation between board gender diversity and firm accounting performance, Post and Byron found, was .047. Meta-analyses linking team gender diversity to team performance (e.g., Bell et al., 2011) reach much the same conclusion as meta-analyses linking board gender diversity to firm performance that is, the relationship between team gender diversity and team performance is tiny. How diversity, equity, and inclusion (DE&I) matter | McKinsey c. the manager's supervisory needs are lowered, the manager is allowed greater time to oversee a wider range of activities c. require Mr. Leagreet to personally certify the firm's financial reports. Both the Pelzer purchase and the Alvarez sale were in transit at year-end. When they argue, they do it in a pretty much respectful way. d. the opportunity for higher compensation through firm growth, a reduction in mana-gerial employment risk. 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Shareholder value is Another recent study by Jonson et al. In McKinsey's previous studyconducted with 2014 numbersthat increase had been 35%. Consensus The relationship between CEO gender and long-term company performance is statistically significant, the authors find, but tiny. Again, its important to remember that a significant correlational relationship does not prove causality. Research suggests that firms with ____ perform better, especially when collaboration among top management team members is important: A primary objective of corporate governance is to: Which of the following is a FALSE statement about corporate governance? Five or so years after the financial crisis, the pressure on boards and directors to raise their game remains acute. For example, a few years ago, Apples shareholders voted against recruiting more minorities to its top management team, after the company argued that such a measure would be overly restrictive. 5 a. the director of food service for IFS Compared to managers, shareholders prefer d. governmental relations. If this was the case, board diversity could have no effect on operating performance but still have a negative effect on market returns. b. the market for corporate control. a. greenmail. Increases in board diversity may signal to investors that the firm is motivated by social goals and cares less about maximizing shareholder value. Further, there is no evidence available to suggest that the addition, or presence, of women on the board actually causes a change in company performance. A recent study, of board composition and financial data on 1,644 public companies in the United States between 1998 and 2011, finds that companies that appoint women to the board are no more profitable than those that do not. d. requiring that outside directors be truly objective by having no ownership interest in the firm. See answer Advertisement sandlee09 Answer: c. Explanation: Based on these findings, we worked with Mike Fucci, Chairman of the Board at Deloitte, to develop recommendations for how board chairs and directors can create more egalitarian board cultures and improve their governance. Women should be appointed to boards for reasons of gender equality., Women Directors and Other Dimensions of Company Performance. That gives you an opening to say, Oh, okay, we need to look for somebody who understands manufacturing abroad. So, as long as we are going to go look for somebody, lets use it as an opportunity to build some diversity.. d.potential tax burden for. A. greater experience in a wider range of indus-tries, lessening of managerial employment risk "Several members of the board of directors of American Textile Products (ATP) have proposed creating the position of lead director. Does this mean that we should not promote women to corporate boards? Annual U.S. beer production data is given below. d. Mr. Abercrombie should find significant need for his services in companies in tran-sitional economies. a. used to diversify the firm. CamCell is presently searching for a new CEO. d. ownership of a company to a second party. Diversity doesnt matter as much on boards where members perspectives are not regularly elicited or valued. "There is some evidence that those firms targeted for takeover by active corporate raiders are: d.of the focus on stewardship-management in German firms rather than the financial perform-ance focus of U.S. firms.