Chapter 6 Multiple Choice Questions

. Managers are entrusted to run the company in the best interest of ________. Specifically, they have a duty to act for the benefit of the company, as well as a duty of ________ and of _______.

Shareholders, Care and Skill, Diligence

Stakeholder, Care and Skill, Diligence

Shareholders, Self-interest, Diligence

Stakeholders, Care and skill, Self-interest

. The relationship between shareholders and the company, or so called ________, describes shareholders as _________ and managers of the company as ________.

Agency relation, Agent, Principals

Stakeholder management, Agent, Principals

Agency relation, Principal, Agents

Stakeholder management, Principal, Agents

. The so-called BRIC countries (Brazil, Russia, India and _______) tend to follow a __________ approach to corporate governance. However, recently this has tended to move towards more _______-based mechanisms.

Canada, Market, Relationship

China, Market, Relationship

Canada, Relationship, Market

China, Relationship, Market

. Which of the following factors are important when discussing national corporate governance regimes?
1. Pressures in favour of a convergence in governance models;
2. Considerable levels of heterogeneity in governance systems described as being the same or similar;
3. Corporate governance deviance occurring due to internal firm pressures;
4. The Anglo-American model being considered the best model in light of the recession in the late 2000s.

1,2,3

1,3,4

2,3,4

1,2,3,4

. Which of the following statements are correct?
1. Executive directors provide a link between managers and shareholders;
2. Non-executive directors are responsible for running the firm;
3. Executive directors' job is to ensure that the corporation is being run in the best interests of the shareholders;
4. Executive directors are responsible for running the firm.

1,4

1,3

2,3

1,2,3

. To ensure the independence of the non-executive board members, they are a number of steps which can be taken, which include non-executives being drawn from _______ the company, being appointed for a _________ time period as well as being appointed _________.

Outside, Limited, Independently

Inside, Limited, Intermittently

Outside, Unlimited, Intermittently

Inside, Unlimited, Independently

. In order to try and align the interest of shareholders and senior management of a company, _________ are often made available to _______ of a company, to ensure that it is in their interests to increase _______ and dividend performance.

Share options, Senior managers, Share Price

Share options, All employees, Share Price

Non-financial remunerations, Senior managers, Employee Satisfaction

Non-financial remunerations, All employees, Employee Satisfaction

. Which of the following statements regarding the ethical issues associated with insider trading are correct?
1. There is inherent unfairness when one party trades with superior knowledge;
2. The knowledge used by insider traders is misappropriated from the firm involved;
3. The actions of insider traders increase investor confidence in financial markets;
4. Insider trading undermines the fiduciary relationship.

1,2,3

1,2,4

2,3,4

1,2,3,4

. _______ such as bitcoin are becoming increasingly mainstream and have a whole host of associated ethical implications, for example, they are______ and more ______. However, they have also been used to engage in _______.

Cryptocurrencies, Expensive, Secure, Financial Crime

Traditional currency, Cheap, Unsecure, Charitable giving

Cryptocurrencies, Cheap, Secure, Financial crime

Traditional currency, Expensive, Unsecure, Charitable giving

. Some of key differences between Islamic finance and conventional finance include - prohibition of charging and paying _______, prohibition on ______ and ______ transactions, prohibition of sinful investment and requirement for all financial products to be backed by __________.

Interest, Certain, Speculative, Intangible assets

Interest, Uncertain, Assured, Intangible assets

Interest, Uncertain, Speculative, Tangible assets

Interest, Certain, Assured, Tangible assets