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8.1 Which of the following statements about corporate social responsibility is true?

(i) CSR guarantees increased profit levels
(ii) CSR adds cost to organisational activities and reduces profit levels
(iii) Social responsibility may have commercial benefits
(iv) Social responsibility is a concern confined to business organisations

• (i), (ii), (iii) and (iv)

• (i) and (iii)

• (ii) and (iv)

• (iii) only

Calum, Heidi and Jonas are managers for Zip Co. They have been told that their salary will be based on
company performance and that a bonus scheme will also be introduced. The bonus will also be related
to company performance. Which of the following best describes the approach to governance that Zip Co
is using?

• Stewardship theory

• Agency theory

• Stakeholder theory

Michael has been asked to prepare a presentation for the company directors on good corporate
governance. Which one of the following is he likely to exclude from his presentation?

• Risk management

• Internal controls

• Maximising shareholder wealth

• Accountability to stakeholders

Corporate governance is essentially of what significance?

• Control system

• Strategic importance

• Risk management

Which of the following is a feature of poor corporate governance?

• Domination of the board by a single individual

• Critical questioning of senior managers by external auditors

• Supervision of staff in key roles

• Lack of focus on short-term profitability

The tasks of which body include: monitoring the chief executive officer; formulating strategy; and
ensuring that there is effective communication of the strategic plan?

• The audit committee

• The Public Oversight Board

• The board of directors

• The nomination committee

Which of the following would be included in the principles of Corporate Social Responsibility?

(i) Human rights
(ii) Employee welfare
(iii) Professional ethics
(iv) Support for local suppliers

• (ii) and (iii) only

• (i) only

• (ii), (iii) and (iv) only

• (i), (ii) and (iv) only

Which of the following is subject to the least direct regulation?

• Employment protection

• Corporate social responsibility

• Corporate governance

In most countries, what is the usual purpose of codes of practice on corporate governance?

• To establish legally binding requirements to which all companies must adhere

• To set down detailed rules to regulate the ways in which companies must operate

• To provide guidance on the standards of the best practice that companies should adopt

• To provide a comprehensive framework for management and administration

Who should set directors' reward and incentive packages, according to corporate governance provisions?

• The board of directors

• The nomination committee

• A remuneration committee made up of independent non-executive directors