Reading 48: The Corporate Governance of Listed Companies:

statements, 2008, class, corporate, following

1.Which of the following statements regarding corporate governance practices is FALSE?

A) Corporate governance is the system of internal controls/procedures by which firms are managed.

B) Corporate governance provides a framework that defines rights of management and the board.

C) Good corporate governance practices ensure that the firm’s financial and operating activities are reported to shareholders in a verifiable manner.

D) Corporate governance is not as important for firms with largely dispersed minority shareholders.

2.Corporate governance is the set of internal controls, processes and procedures defining how a firm is managed. Which of the following statements concerning corporate governance is FALSE?

A) Corporate governance defines the appropriate rights, roles and responsibilities of management, the board, and stakeholders within a firm.

B) Good corporate governance means that the board can work effectively with management.

C) Good corporate governance practices seek to ensure that the board protects shareholder interests.

D) Good corporate governance dictates that the firm’s financial, operating and governance activities are reported to stakeholders in a fair, accurate and timely manner.

3.All of the following practices constitute good corporate governance, EXCEPT:

A) the board of directors protects shareholder interests, and the shareholders have a voice in governance.

B) the firm’s financial, operating, and governance activities are reported to shareholders in a fair, accurate, and timely manner, and the board of directors protects shareholder interests.

C) there are proper procedures and controls covering management’s day-to-day operations and the firm acts lawfully in dealings with shareholders.

D) the firm’s financial, operating, and governance activities are reported to shareholders in a fair, accurate, and timely manner, and management acts independent of the board of directors.

4.Which of the following activities would least likely be an example of good corporate governance?

A) Management is allowed to act independently of board of directors.

B) The board of directors has decided to hold annual elections.

C) The board of directors has decided to conduct a self-assessment.

D) The board has decided to eliminate finders’ fees for its members for any potential acquisitions that are brought to management’s attention.