Reading 48: The Corporate Governance of Listed Companies: corporate, class, benefit, critical, ensuring

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1.A critical corporate governance issue is ensuring that the board and its members have the requisite experienced needed to properly govern the firm for the shareholders’ benefit. When considering board member qualifications, investors and shareholders should consider whether board members can act with care and competence as a result of their experience with all of the following EXCEPT:

A)   technologies, products, services which the firm offers.

B)   the competitive landscape the firm faces.

C)   legal issues.

D)   strategies and planning.

2.A properly qualified board member is of vital importance to proper corporate governance within a firm. Board members who lack the requisite skills, knowledge and expertise to conduct a thorough review of the firm’s activities are:

A)   more likely to consult with outside interests to assist in decision-making.

B)   more likely to be “unpaid” board members.

C)   less likely to participate fully in decision-making matters during board meetings.

D)   more likely to defer to management when making decisions.

3.Which of the following might be an undesirable trait of a member of the board of directors?

A)   Experience with the technologies, products, and services the firm offers.

B)   Positive public statements regarding an individual’s ethical viewpoints.

C)   Service on the board for more than 10 years.

D)   Lack of legal or regulatory problems as a result of working with other firms.

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答案和详解如下：

1.A critical corporate governance issue is ensuring that the board and its members have the requisite experienced needed to properly govern the firm for the shareholders’ benefit. When considering board member qualifications, investors and shareholders should consider whether board members can act with care and competence as a result of their experience with all of the following EXCEPT:

A)   technologies, products, services which the firm offers.

B)   the competitive landscape the firm faces.

C)   legal issues.

D)   strategies and planning.

The correct answer was A)

Knowledge of the firm’s competitive landscape is likely beyond what a board member should have intimate knowledge about. The other items are all issues a board member should be knowledgeable about. Other issues board members should have experience with include financial operations, accounting and auditing topics, and business risks the firm faces.

2.A properly qualified board member is of vital importance to proper corporate governance within a firm. Board members who lack the requisite skills, knowledge and expertise to conduct a thorough review of the firm’s activities are:

A)   more likely to consult with outside interests to assist in decision-making.

B)   more likely to be “unpaid” board members.

C)   less likely to participate fully in decision-making matters during board meetings.

D)   more likely to defer to management when making decisions.

The correct answer was D)

Board members must be properly qualified, having the knowledge and experience which is required to advise management in light of the firm’s specific situations encountered. The other answers are incorrect.

3.Which of the following might be an undesirable trait of a member of the board of directors?

A)   Experience with the technologies, products, and services the firm offers.

B)   Positive public statements regarding an individual’s ethical viewpoints.

C)   Service on the board for more than 10 years.

D)   Lack of legal or regulatory problems as a result of working with other firms.

The correct answer was C)

Service on the board for more than 10 years may indicate knowledge and experience, but may result in a member becoming too close to management.

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