CamCell is presently searching for a new CEO. A business journal from the Wharton School of the University of Pennsylvania. 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. b. defense tactics are opposed by institutional investors. Ambrose Bierce, the CEO of DictionAry, has been paid a lump sum amounting to three years' salary because DictionAry has been bought in a hostile takeover by its main competitor. "Compared to managers, shareholders prefer: Boards of directors are now becoming more involved in - Course Hero c. financial institutions such as mutual funds and pension funds that control large-block shareholder positions. d. the board of directors. b. firms earning above-average returns 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. b. long-term firm performance is more easily manipulated by the board of directors through financial and accounting methods than are shorter-term measures of firm performance. c. the banks owing the largest shares of stock in the firm. a. a. some foreign firms have delisted on U.S. stock exchanges. To test this theory, we conducted an experiment with 193 alumni and current students of a top-tier international business school. b. financial responsibility to employees. Managers in the U.S. receive ____ compensation than managers in the rest of the world. 2010).These studies generally focus on institutional investors as shareholders (Roberts and Yuan 2006), and when they do address the role of . a. making CEOs more accountable for their performance. b. executive compensation that is primarily based on long-term performance. b. insuring that the strike price value of the options can be lowered if the organizational environ-ment becomes more risky. c. CEOs and CFOs must personally certify the company's financial reports. "In contrast to managers' desires, shareholders usually prefer that free cash flows be: Agricultural Chemicals, Inc., was the target of a hostile takeover six months ago. 106. c. executive compensation systems. a. boards of directors. Are there further consequences for firm performance if females join a firms upper echelons? a. reasonably compensating a CEO. d. the opportunity for higher compensation through firm growth, a reduction in managerial employment risk. In a study of 1,069 leading firms across 35 countries and 24 industries, we found that gender diversity relates to more productive companies, as measured by market value and revenue, only in . c. The CEO was never held responsible for his unethical actions. Research suggests that boards of directors perform betterif a. the CEO is also the chairperson of the board ofdirectors. b. enforcement We showed them a press release of a fictional company, announcing the appointment of Jack Smith or Marilyn Clark as a new member of the board. The fact that two quite distinctive meta-analyses reached nearly identical conclusions carries a lot of weight. b. The board wishes the CEO to take more short-term risks in order to achieve potentially higher long-term returns. Institutional Investors on Boards: Does Their Behavior Influence As ownership of the corporation is diffused, shareholders' ability to monitor managerial deci-sions b. a weak board of directors. a. going to actively defend their firm from takeover attempts. d.over-valued firms. d.encumbered. b. defense tactics are opposed by institutional investors. a. Satyam's stock price suffered a significant decline. a. increases. d. the difference in risk propensity between owners and managers. However, rigorous, peer-reviewed academic research paints a different picture. d. has weakened the effect of other governance mechanisms. Consensus c. require Mr. Leagreet to personally certify the firm's financial reports. b. selecting new CEOs. To establish causal effects, you need to conduct a randomized control trial. c. The CEO/Chairperson of the Board has been suspected of opportunistic behavior. For a board comprised of lawyers, this might mean adding an engineer and a sociologist in the mix. b. riskier strategies with more focused diversifica-tion for the firm. One shared: I have some influence, and Im trying to exert my influence.. a. c. public pension funds As we said, directors generally don't really want to monitor, and they are not sure if they can do so effectively. the board includes employees as voting members.c. c. an increased number of IPOs (initial public offerings) are expected. a. usually on the verge of bankruptcy. How diversity, equity, and inclusion (DE&I) matter | McKinsey d.is eliminated. shipping point, and $22,000 of goods sold to Alvarez Company for$30,000, f.o.b. "The separation between firm ownership and management creates a(n) ____ relationship. "Simon Leagreet, the Chairperson and CEO of L-EVA Industries, Inc., has long been the major power at L-EVA. What difference can Archibald expect? Cultivate trust and encourage the board to be involved in strategy. All of the following are consequences of the Sarbanes-Oxley Act EXCEPT We merged our data on board composition and firm financials with social performance ratings from KLD STATS, an index for socially responsible investing. Activist shareholders are not necessarily more convinced about diversity being a source of value creation. d.always outperforming their industry. c. greenmail. The Sarbanes-Oxley Act requires all of the following EXCEPT: Working in a group, discuss how the New Therapy Company can meet the deadline and still ensure a high quality of care. c. Research shows that once a hostile takeover has been defeated, the firm is safe from other hostile takeover attempts for many years. a. mandating that all outside directors be drawn from government or academia rather than industry. d. a system of cross-shareholding among firms. b. appoint another individual as chairperson of the Board of Directors. c. Membership of U.S. boards of directors is less directly influenced by the company's employees than is the membership of German Aufsichsrat. 48 New Report: Companies With Diverse Boards Out Performed Their Peers d. a silver handshake. Other research has found no relationship to performance at all. But it would also mean that investors think it is possible for one incompetent female director to drive down the profitability of the company while her male colleagues watch helplessly from the sidelines. d. outside directors own significant equity in the organization. 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.. Managers may decide to invest ____ in products that are not associated with the firm's current lines of business to increase the firm's level of diversification and decrease their employment risk. Depending on which meta-analysis you read, board gender diversity either has a very weak relationship with board performance or no relationship at all. c. strategy implementation actions to functional managers. a. Of course not. d.reflected in the price of the stock. c. Research shows that once a hostile takeover has been defeated, the firm is safe from other hostile takeover attempts for many years. b. enforcement The decisions made by top-level managers are typically complex and nonroutine. Shareholder value is Which of the following is a FALSE statement about corporate governance? b. may not have a direct effect on firm performance. (Statistical significance depends in part on sample size. They also raised concerns with what they referred to as checking the box initiatives and tokenism for the sake of board diversity. b. risks borne by One explained that their collegial board culture resulted from information being shared openly, with little back channeling or meeting outside of the formal meeting to raise concerns. The decisions made by top-level managers are typically complex and nonroutine. d.curvilinearly related to, "The longer the focus of managerial incentive compensation, the greater the ____ top-level managers. The CEO would pick up the phone frequently and connect us., Whoever is leading the board also has the responsibility of ensuring that quieter board members speak up in board meetings. Hed speak like, without taking any breaths for two hours on end., But even in hierarchical cultures, the CEO, Chairman, or lead director can help to create a more open communication environment. c. German firms will not be interested in Mr. Abercrombie's services because the German system of decision-making is based on authority and few conflicts emerge. c. A number of factors intervene between top-level management decisions and firm performance. The top management team at Sierra Infusion is concerned about the declining performance of firms in their industry. Her research examines how people manage multiple identities, boundaries, and inclusion in organizations while navigating any tensions associated with doing so. The market for corporate control may not be as efficient as previously thought as recent findings suggest that those firms targeted for takeover by active corporate raiders are The team members are becoming concerned about the security of their jobs at Sierra Infusion. d. Banks have less influence on the governance of German corporations than they do on U.S. corporations. d.For legal reasons, the board cannot consider the interests of CalPERS over the interests of its top executives. One interviewee discussed how this was a particularly challenging dynamic on a board that was resistant to input either from shareholders or board members: There was not a lot of open communication. And in many cases, this might mean recruiting board members outside of existing networks. "The major determinant of CEO pay is(are): b. the manager frequently invests in the acquired firm which allows them extensive profits, the manager can frequently buy excess assets divested by the acquired firm c. German firms will not be interested in Mr. Abercrombie''s services because the German system of decision-making is based on authority and few conflicts emerge. The Vorstand of a German corporation makes decisions about organization direction and management. The argument that gender diversity on the board will improve company performance rests on the assumption that the addition of one or more women to an all-male board will increase the boards cognitive variety because women the argument goes differ from men in their values, experiences, and knowledge. b. Archibald Smith has moved from an upper-middle management job at Chromatic Array, Inc., to a similar position with Pixilair Corporation. A. greater experience in a wider range of indus-tries, lessening of managerial employment risk c. greenmail. b. firms earning above-average returns The women named to corporate boards may not in fact differ very much in their values, experiences, and knowledge from the men.. a. monitoring Not included in the physical count were$25,000 of goods purchased from Pelzer Corporation, f.o.b. b. accounting firms are forbidden from providing both auditing and consulting services to clients. A recent study, of board. b. They are more a function of general market conditions. So, existing findings could reflect a causal relationship, a reverse-causal relationship, or the effects of other variables. Which of the following statements is about corporate governance in Germany is FALSE? d. likely to be terminated by the acquiring firm even in a friendly takeover. b. risk undertaken by managers to earn stock options. d. defense tactics make the costs of a takeover lower. Sometimes, its laziness. It signals an end, or at least the beginning of an end, to gender exclusivity in firm leadership. If Culver had just signed a blank piece of paper after being told that the bank would make a receipt out of it by printing the appropriate words around his signature, would he be able to avail himself of the defense of fraud? "Given the demands for greater accountability and improved performance, which of the following is NOT a voluntary change many boards of directors have initiated? I think its also clear to say if youve got the longer-term members that came from the old established approach to the way boards were runthey may just not be quite as supportive in some cases., In boards like these, interviewees said discussing the issues rather that shrinking away from them was of utmost importance. d. establishing and using formal processes to evaluate the board's performance. c. defense tactics are typically ineffective in deterring the takeover. c. managers' risk of job loss, loss of compensation, and/or loss of reputation. Increases in board diversity may signal to investors that the firm is motivated by social goals and cares less about maximizing shareholder value. "All of the following statements are TRUE about the use of defense tactics by the target firm during a hostile takeover EXCEPT: And, finally, even if the addition of women to corporate boards does improve cognitive variety and decision making, companies may only see benefits to their accounting performance (their sales, profits, return on assets, for example) not their market returns. 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. d.defense tactics make the costs of a takeover lower. The best evidence comes from a recent meta-analysis of 146 studies (Jeong and Harrison, 2017). ANS: D PTS: 1 DIF: Medium d. b. To achieve cognitive diversity, then, we should focus on dimensions of diversity other than gender. The market for corporate control has collapsed with the economic crises in Japan. High-performing boards: What's on their agenda? | McKinsey "Managerial employment risk is the: And even when individuals who are minorities, tokens, or outliers speak up, the majority group members may discount their views. b. the addition of outside directors to the board. a. high executive turnover. Ownership concentration is determined by both a. the firm is overpriced in the market. "The argument for having one individual serve as CEO and chairperson of the Board of Directors is that this: d. 75. d.establishing and using formal processes to evaluate the board's performance. The average correlation between CEO gender and long-term financial performance is .007. b. a weak board of directors. Firms should be selecting the very best directors from the largest talent pool possible, and excluding women from that pool to avoid market penalties would be counterproductive. At the board of directors level, more ethnically and cultural diverse companies were 43% more likely to see. Can you catch two birds with one stone? The impacts of nominating b. Given global interest in the effects of board gender diversity and the availability of abundant data on board gender composition and firm performance, many researchers have investigated the topic. b. inside Mr. Abercrombie has had striking success in reducing conflict and hostility among directors and allowing boards to develop more cohesiveness. We dont know exactly why this theoretical logic doesnt hold among corporate boards. d. The compensation committee may not have comprehensive firm performance data. a. used to diversify the firm. What amount should Stallman report as its December 31 inventory? For example, our interviewees on the boards of hi-tech start-ups and cyber security firms revealed that women, minorities, and younger board members often hold these coveted roles on boards in their firms and industries. Compute answers to three decimal places. d. a poison pill. Compensation of CEOs in both private and public companies is being tied more closely to observable performance goals. This isnt a strong relationship, but its a good bit stronger than the relationship between board diversity and corporate performance. "Product diversification provides two benefits to managers that do not accrue to shareholders: ____ and ____. Research Review: Does Gender Diversity on Boards Really Boost Company Yet, the answers have not been clear or consistent. If so, how and when? German executives are not dedicated to the maximization of shareholder value largely because d. The gap in compensation between CEOs in public and private companies is in-creasing. But when it comes to stock market performance, companies with women on the board actually see a decline in their market value for two years following the appointment. A virtually exclusive reliance on financial controls may occur when outsider-dominated boards exist. d. frozen assets, Product diversification provides two benefits to managers that do not accrue to shareholders: ____ and ____. a. bonuses. Members of these boards believe that both their expertise and willingness to learn is recognized and incorporated into the boards work. d.the head of contract services for the Marines, Chapter 11: Organizational Structure and Cont, John David Jackson, Patricia Meglich, Robert Mathis, Sean Valentine, Information Technology Project Management: Providing Measurable Organizational Value, Operations Management: Sustainability and Supply Chain Management, canvas quiz : Blood vessels and circulation. EXCEPT a. For example, Norway, Spain, France, and Iceland all have laws requiring that women comprise at least 40% of boards at publicly listed companies. The Vorstand (management board) of a German corporation makes decisions about strategy and management. b. a. a uniform compensation plan for all corporate executives, U.S. and foreign alike. b. control What difference can Archibald expect? c. lower Which of the following is most likely to be TRUE? b. a. ATP has been the initiator of several hostile takeovers in the last two years. But are investors walking the walk on board diversity? d. The firing by President Obama of the CEO of General Motors because the board had failed to act in previous years. People believed that the company that appointed Marilyn cared more about improving the social performance of the firm and less about maximizing shareholder value, compared to the company that appointed Jack. Companies in our research with a digitally savvy board had 38 percent higher revenue . The CEO genuinely seeks their greater involvement. To make diverse boards more effective, boards need to have a more egalitarian culture one that elevates different voices, integrates contrasting insights, and welcomes conversations about diversity. b. company unions which are a type of governance system. Research suggests that boards of directors perform better ifa. c. focusing attention on ineffective boards of directors. a. increases. c. the government. d.internal auditing costs have increased by about one-third. We find that companies are not any less profitable after appointing female directors to the board than they were prior to the appointment. a. going to actively defend their firm from takeover attempts. b. positively related to Measuring Board of Director Performance: An Overview and - Emerald d. made up of CPAs with auditing experience. On January 1, California law said that all locally headquartered publicly traded companies must have at least one female director by 2020. (2020) finds that firms with older boards perform better than those with younger boards in terms of ROA. We also asked them to evaluate the competence of the new board member. In a normal distribution, data values farther from the mean are a. less common than data values close to the mean. a. firms with unethical top executives c. the laxity of institutional investors. Indeed, this is what Post and Byrons meta-analysis showed. It is also important to consider recruiting from outside of the CEO and CFO pool to increase board diversity. a. increased diversification of Sierra Infusion. Corporate governance and board effectiveness 2.0 - ResearchGate A growing body of research including studies by McKinsey & Company has proven that companies with more women in senior executive and board roles have advantages over those that dont.. c. Electing an lead director. c. Competition At a meeting over dinner, the top management team agrees to go to the board of directors with a proposal for d. ownership of a company to a second party. "Shareholder value is: d.outside directors own significant equity in the organization. 5. mechanics and neural control of contraction, Information Technology Project Management: Providing Measurable Organizational Value, John David Jackson, Patricia Meglich, Robert Mathis, Sean Valentine. "A major conflict of interest between top executives and owners, is that top executives wish to diversify the firm in order to ____, while owners wish to diversify the firm to ____. c. the employees directly involved in the wrongdoing d. the proportion of insiders on the board of directors. 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. 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. c. used to reduce corporate debt. b. requiring that outside directors be former executives of the firm. c. agency Research following the resource dependence theory generally expects boards to have a positive effect on firm performance by engaging in the resource provision function, as doing so the firms to benefit from directors' human capital and social capital in value creation ( Haynes and Hillman, 2010; Jiang et al., 2020 ). The Chinese governance system has been moving towards the Western model in recent years. a. high executive turnover. The research found that diversity doesnt guarantee a better performing board and firm; rather, the culture of the board is what can affect how well diverse boards perform their duties and oversee their firms. Executive compensation is a governance mechanism that seeks to align managers' and owners' interests through all of the following EXCEPT The interests of multinational corporations' shareholders may be best served when there is a. safer strategies with greater diversification for the firm. primary focus is on maximizing shareholder value. Similarly, after promising to address board diversity, Skechers explained their decision not to nominate a female director by saying that the firms primary focus is on maximizing shareholder value. In May 2019, the company nominated their first female board member following the enactment a law requiring California companies to have at least one woman on their board. b. institutional shareholders "The market for corporate control serves as a means of governance when: b. strengthening the internal management and accounting control systems d.the board of directors. b. the number of stockholders and total percentage of shares they own. c. poorly-performing firms c. determined by the size of the firm. Innovation The chapter Opening Case suggests that ___________ is (are) frequently blamed for high CEO pay during periods where corporate performance has been poor. The New York Stock Exchange requires that the audit committee be c. private shareholders rarely have large ownership positions in the firm. Both the Pelzer purchase and the Alvarez sale were in transit at year-end.
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