BTF 2 - Chapter 11

The agency problem underlies the need for sound corporate governance. In this context, the “agents” are the company’s:

• Customers

• Shareholders

• Directors

• Auditors

From the public policy perspective, which of the following is NOT the main aim of corporate governance to ensure that the company meets?

• The objectives of its shareholders

• The interests of other individuals and groups with a direct ‘stake’ in the company

• The interests of the public at large

• The best personal interests of its directors

Which of the following is NOT included in key elements of corporate governance?

• External auditors

• Internal auditors

• Senior management

• Government

Good practice in corporate governance is LEAST LIKELY concerned with:

• Risk management

• Unethical and unsustainable behaviors

• Transparency

• Reducing the potential for conflict

Regarding the effect of the financial system on governance, which of the following is a type of financial system?

• Market-based system

• Indirect investment system

• Direct investment system

• Household-based system

Business ethics are primarily molded by the expectations of:

• Directors

• Customers

• Government

• Society

The public policy perspective on corporate governance requires senior management to:

• Ensure the interest of the public at large

• Balance between economic and social goals

• Achieve long-term sustainable value for shareholders

• Act as the stewards of the company’s resources

Corporate governance of a company in which the sales are made by individual salespeople who routinely bypass the company’s strict credit check procedure faces the problem of:

• Domination by a small group

• Inadequate control function

• Lack of supervision

• Misleading financial statements

In good corporate governance, who works on behalf of the shareholders to evaluate whether or not the company’s financial statements are true and fair?

• Directors

• Internal audits

• External audits

• Employees

The view of corporate governance that “the law requires directors to act in the best interests of the company when acting as stewards of its resources” is arisen from which of the following perspectives?

• The public policy perspective

• The corporate perspective

• The stakeholder perspective

• The stewardship perspective