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Question 1

According to Cadbury (2002), corporate governance is an issue of power and:

a) Rights

b) Accountability

c) Profit

d) Appropriability

Question 2

The OECD argues that corporate governance problems arise because:

a) Ownership and control is separated

b) Managers always act in their own self interest

c) Profit maximization is the main objective of organizations

d) Stakeholders have differing levels of power

Question 3

The Institute of Chartered Accountants in England and Wales considers argue that one particular stakeholder group should have primacy over all other groups. Which stakeholder group are they referring to?

a) Customers

b) Managers

c) Shareholders

d) Society

Question 4

An organization that is owned by shareholders but managed by agents on their behalf is conventionally known as the modern:

a) Conglomerate

b) Corporation

c) Company

d) Firm

Question 5

The modern corporation has four characteristics. These are limited liability, legal personality, centralized management and:

a) Fiduciary duty

b) Stakeholders

c) Shareholders

d) Transferability

Question 6

What makes a corporation distinct from a partnership?

a) If the members of a corporation die, the corporation remains in existence providing it has capital

b) If the members of a corporation die, the corporation ceases to exist

c) A corporation cannot own property

d) A corporation cannot be held responsible for the illegal acts of its employees

Question 7

The term 'asymmetry of information' means information in a corporation is:

a) Transferable to all stakeholders

b) Not transferable to all stakeholders

c) Not equally transparent to all stakeholders

d) Equally transparent to all stakeholders

Question 8

The view that sees profit maximization as the main objective is known as:

a) Shareholder theory

b) Principal-agent problem

c) Stakeholder theory

d) Corporation theory

Question 9

Who is the most famous exponent of shareholder theory?

a) Michael Porter

b) Adam Smith

c) Milton Friedman

d) Peter Drucker

Question 10

The key protagonist of stakeholder theory is:

a) Adam Smith

b) R. E Freeman

c) Adrian Cadbury

d) E Sternberg

Question 11

Where an organization takes into account the effect its strategic decisions have on society, this is known as:

a) Corporate governance

b) Business policy

c) Business ethics

d) Corporate social responsibility

Question 12

Which intervention resulted from the Enron scandal?

a) The Hampel Committee

b) The Sarbannes-Oxley Act

c) The Greenbury Committee

d) The Cadbury Committee

Question 13

Executive pay in the UK was reviewed by:

a) The Greenbury Committee

b) The Hampel Committee

c) The Cadbury Committee

d) The Higgs Committee

Question 14

Kakabadse and Kakabadse (2002) argue that existing corporate governance models in general are:

a) Taking multiple stakeholder needs into account

b) Increasing social inequalities

c) Becoming more transparent

d) Promoting environmental damage

Question 15

In Japan, some corporations operate within the philosophy of 'kyosei'. The term 'kyosei' means:

a) No man shall be richer than another man

b) All stakeholders are equal

c) Living and working for the common good

d) If the corporation is bad, society is bad

Oxford University Press, Online Resource Centre, Chapter 12.

Chapter 12

Instructions