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research suggests that boards of directors perform better if

    research suggests that boards of directors perform better if

    b. inside c. Competition Complete the following: In small firms, managers often own a ____ percentage of the firm, which means there is ____ separation between ownership and managerial control. At a meeting over dinner, the top management team agrees to go to the board of directors with a proposal for: d.banks. c. the employees directly involved in the wrongdo-ing. The CEO of Alta Corp. is dismayed by a lack of effort and insights his directors provide during board meetings. d.is less expensive than maintaining two top executives. d. the head of contract services for the Marines. Requiring that the directors own stock in the company. b. Japanese firms will have little interest in Mr. Abercrombie's specialty because these skills are already practiced at a high level. a. used to diversify the firm. b. banks and other lending institutions that have provided major financing to the firm. c. poorly-performing firms 2010).These studies generally focus on institutional investors as shareholders (Roberts and Yuan 2006), and when they do address the role of . 2023 Knowledge at Wharton. a. ATP has been the initiator of several hostile takeovers in the last two years. In a recent study, we examine board composition and financial data on 1,644 public companies in the U.S. between 1998 and 2011, controlling for numerous firm-specific characteristics like size and corporate governance structure. Despite persistent efforts to tackle underrepresentation of women on corporate boards, most boardrooms remain mostly male. The average correlation between CEO gender and long-term financial performance is .007. "There is some evidence that those firms targeted for takeover by active corporate raiders are: Nor do they perform worse. Mr. Abercrombie is con-sidering expanding his consulting practice overseas. primary focus is on maximizing shareholder value. b. d.the board of directors. Still, the relationship between gender diversity and accounting returns was tiny. d.CEOs and other top executives tend to hold their jobs for five years or less, meaning they are not employed by the firm for the appropriate period of time. a. equivalent a. safer strategies with greater diversification for the firm. Research suggests that the activism of institutional investors such as TIAA-CREF and CalPERS Other research has found no relationship to performance at all. a. this delays their compensation for present actions to future years. The repurchase at a premium of shares of stock that have been acquired by the aggressor firm in a hostile takeover in exchange for an agreement that the aggressor will no longer target the com-pany for takeover is called Consequently, the board is: c. require Mr. Leagreet to personally certify the firm's financial reports. 5 Which of the following statements is most likely to be TRUE? Because women directors tend to be significantly . The two meta-analyses reached very similar conclusions, despite the differences in the underlying studies (140 studies vs. 20, etc.). According to the excerpt, how do production processes affect the comparative advantage of the United States? the board is homogenous in composition. "Japanese keiretsu are: b. Simon Leagreet, the Chairperson and CEO of L-EVA Industries, Inc., has long been the major power at L-EVA. For example, our interviewees on the boards of hi-tech start-ups and cyber security firms revealed that women, minorities, and younger board members often hold these coveted roles on boards in their firms and industries. c. gives the Board of Directors more power. As one long-time board director described it: The problem is how boards get formed and how you fill vacancies. It is worth noting that gender diversity in other kinds of work teams is not significantly positively related to performance, either. Institutional Directors: Types. c. requiring outside directors to own significant equity stakes in the firm. Women should be appointed to boards for reasons of gender equality., Women Directors and Other Dimensions of Company Performance. We think this happens because female board appointments are anything but gender neutral. d. government agencies. c. the corporation has greatly exceeded performance expectations. There are small but dependably positive associations of female representation in CEO positions and TMTs with long-term value creation for a firms fiscal outcomes. This plan will be very attractive in luring candidates for the CEO position. c. managers' risk of job loss, loss of compensation, and/or loss of reputation. a. greenmail. d. reduce their employment risk, increase the company's value, Agency costs reflect all of the following EXCEPT ____ costs. c. the laxity of institutional investors. People believed that the company that appointed Marilyn cared more about improving the social performance of the firm and less about maximizing shareholder value, compared to the company that appointed Jack. Not included in the physical count were$25,000 of goods purchased from Pelzer Corporation, f.o.b. The decisions made by top-level managers are typically complex and nonroutine. Which of the following reasons would NOT explain the difficulty of determining appropriate executive compensation? b. the addition of outside directors to the board. c. Banks' influence over corporations is increasing. Researchers interviewed 19 board directors (15 women and four men) to learn whether and how corporate boards were benefiting from diversity. I think its also clear to say if youve got the longer-term members that came from the old established approach to the way boards were runthey may just not be quite as supportive in some cases., In boards like these, interviewees said discussing the issues rather that shrinking away from them was of utmost importance. a. a golden parachute. c. defense tactics are typically ineffective in deterring the takeover. Which of the following statements is most likely to be TRUE? The team members are becoming concerned about the security of their jobs at Sierra Infusion. c. the board is homogenous in composition. "The argument for having one individual serve as CEO and chairperson of the Board of Directors is that this: b. financial responsibility to employees. c. 50 The compensation of top executives of Chinese companies is closely related to pri-or and current financial performance of the firm. The argument that gender diversity on the board will improve company performance rests on the assumption that the addition of one or more women to an all-male board will increase the boards cognitive variety because women the argument goes differ from men in their values, experiences, and knowledge. b. organizational size. Again, its important to remember that a significant correlational relationship does not prove causality. b. increasing the concentration of ownership of large U.S. firms. d.is eliminated. Consequently, the board has decided on an incentive plan that involves payout based on the firm's performance five years in the future. The market for corporate control may not be as efficient as previously thought as recent findings suggest that those firms targeted for takeover by active corporate raiders are The correlation is .03. d.Traditionally privately-owned Japanese firms are going public. Both the Pelzer purchase and the Alvarez sale were in transit at year-end. a. the firm's free cash flow. This will have no effect on the stock option plan design discussion, because CalPERS' main concern is stock dividends. This suggests that gender diversity on the board explains about two-tenths of 1% of the variance in company performance. d.has weakened the effect of other governance mechanisms. c. incentives for c. remains constant. c. the employees directly involved in the wrongdoing c. The CEO/Chairperson of the Board has been suspected of opportunistic behavior. Who is ultimately responsible for the corporate climate that resulted in this wrongdoing? r:r:r: The apartment is hot. Rigorous, academic studies of CEO gender and company performance tell much the same story as rigorous, academic studies of board gender diversity and company performance do. a. reasonably compensating a CEO. Does this mean that we should not promote women to corporate boards? For example, companies with more than 30 percent . b. b. company unions which are a type of governance system. Compute answers to three decimal places. c. focusing attention on ineffective boards of directors. The fact that a hostile takeover has occurred is proof that the firm was under-performing. b. a weak board of directors. b. the board of directors of IFS The results of these two meta-analyses, summarizing numerous rigorous, original peer-reviewed studies, suggest that the relationship between board gender diversity and company performance is either non-exist (effectively zero) or very weakly positive. Research suggests that boards of directors perform better if d.the difference in risk propensity between owners and managers. Several members of the board of directors of American Textile Products (ATP) have proposed creating the position of lead director. Which of the following is FALSE about corporate governance in China? Rigorous, peer-reviewed studies suggest that companies do not perform better when they have women on the board. b. Hostile takeover attempts are so common that they do not reflect negatively on the firm's performance. a. firms with unethical top executives We merged our data on board composition and firm financials with social performance ratings from KLD STATS, an index for socially responsible investing. b. the market for corporate control. "Compared to managers, shareholders prefer: She said, Having a diversity on the board does not just mean having a bunch of CEOs or a bunch of capitalists.Having board members with different roles whether its a CIO or a CTO or you know independent board directors that come from a different background is really good. d. reflected in the price of the stock. "The market for corporate control serves as a means of governance when: d.companies in mature, slow-cycle industries. a. b. the addition of outside directors to the board. b. internal controls have failed. b. a standstill agreement. a. usually on the verge of bankruptcy. b. firms earning above-average returns a. increases. a. decision making responsibility to a second party. a. generate free cash flows, reduce the risk of total firm failure It is not because companies perform worse after they appoint female directors. What difference can Archibald expect? Board diversity matters but concentrating on only one form of diversity isnt enough. This plan will be very attractive in luring candidates for the CEO position. The CEO tended to dominate the conversation. d.75. One board member discussed her experience on a board: I do feel Im listened to The CEO makes a big difference in terms of the openness., Similarly, another shared how a different CEO made it easier for board members to access the management team: It starts, again, with the CEO not playing the hierarchical role and saying, You cant talk to one of my VPs unless you come through meSo we had access to the next level of management. d. Individualism. Women should be appointed to boards for reasons of gender equality, but not because gender diversity on boards leads to improvements in company performance. b. the appointment by EasyJet of a new chairman of the board You know you might have somebody from HR on the board. Institutional owners are Sometimes, its laziness. c. the corporation has greatly exceeded perform-ance expectations. Which of the following statements is most likely to be TRUE? Spoiler alert: Rigorous, peer-reviewed studies suggest that companies do not perform better when they have women on the board. Agricultural Chemicals, Inc., was the target of a hostile takeover six months ago. But, thats impossible here; we cant randomly assign board members to companies. b. long-term firm performance is more easily manipulated by the board of directors through financial and accounting methods than are shorter-term measures of firm performance. a. negatively related to: c. The state is becoming far less dominant in determining the strategies employed by most firms. Nor are they any less profitable, for that matter. ANS: D PTS: 1 DIF: Medium d. the CEO is also the chairperson of the board of directors.b. Which of the following statements is FALSE? d. outside directors own significant equity in the organization. c. pressure the board of directors to reprice their stock options. During the debate, one of the directors raises the point that CalPERS owns a significant portion of Acme Brand stock. What circumstances would most likely have initiated this proposal? We dont know exactly why this theoretical logic doesnt hold among corporate boards. a. management structures related to total quality management systems. When executives have ownership positions or stock options with their employing firm, they are c. often performing above their industry averages. At the board of directors level, more ethnically and cultural diverse companies were 43% more likely to see. c. requiring outside directors to own significant equity stakes in the firm. Consensus a. a uniform compensation plan for all corporate executives, U.S. and foreign alike. d. The gap in compensation between CEOs in public and private companies is in-creasing. c. the firm's tax issues. b. Results of numerous academic studies of the topic suggest that the presence of more female board members does not much improve or worsen a firms performance. a. increased diversification of Sierra Infusion. One interviewee commented on how having social diversity wasnt good enough if all board members were former CEOs or CFOs. c. lobby legislators to pass laws that are aligned with the organization's interests. Similarly, the relationship of top management team (TMT) gender diversity and company performance is statistically significant but very small. b. executive compensation that is primarily based on long-term performance. Research suggests that boards of directors perform betterif a. the CEO is also the chairperson of the board ofdirectors. a. a uniform compensation plan for all corporate executives, U.S. and foreign alike. c. excessive management compensation. d. establishing and using formal processes to evaluate the board's performance. d. This type of plan is likely to cause the CEO to underinvest in R&D in order to boost CamCell's long-term profitability. The Vorstand is elected by the firm's employees. Are there further consequences for firm performance if females join a firms upper echelons? a. c. A number of factors intervene between top-level management decisions and firm performance. d. Banks have less influence on the governance of German corporations than they do on U.S. corporations. Cultivate trust and encourage the board to be involved in strategy. Compensation of CEOs in both private and public companies is being tied more closely to observable performance goals. The chapter Opening Case suggests that ___________ is (are) frequently blamed for high CEO pay during periods where corporate performance has been poor. d. governmental relations. a. increased diversification of Sierra Infusion. b. firms earning above-average returns An executive's decisions often affect firm performance only over the long run. Managerial employment risk is the "Several members of the board of directors of American Textile Products (ATP) have proposed creating the position of lead director. Write the statements in symbolic form . "The interests of multinational corporations' shareholders may be best served when there is: d. defense tactics make the costs of a takeover lower. d.The firm is traded on the New York Stock Exchange and must change its corporate governance to comply with the NYSE's new rules. b. typically under-performing their industry. Innovation A primary objective of corporate governance is to. An immense investigative effort has been devoted to these questions: over 140 studies in the past several decades, conducted in dozens of countries, and published in journals from many different disciplines and theoretical traditions. We find that companies that appoint women to the board see a decline in their market value for two years following the appointment (after which we no longer see any effect). d.independence of the committees on the firm's Board of Directors. However, rigorous, peer-reviewed academic research paints a different picture. After all, both male and female board members are likely to be selected for their professional accomplishments, experience, and competence. a. "A major conflict of interest between top executives and owners, is that top executives wish to diversify the firm in order to ____, while owners wish to diversify the firm to ____. Which of the following statements is true? c. increased shareholder participation in decision making. There was, however, a difference in the perceived goals of the company. What other expenses might it expect? d. penalties for inadequate firm performance. c. the manager's supervisory needs are lowered, the manager is allowed greater time to oversee a wider range of activities c. Corporate governance mechanisms can be in conflict with one another. "Amos Ball, Inc., is a printing company in Iowa that has been family owned and managed for three generations. d.governmental relations. d. likely to be terminated by the acquiring firm even in a friendly takeover. "The CEO of Skyco, a publicly-traded company that has been earning below-average returns, has been publicly criticized by shareholders for persuading the board of directors to give her interest-free loans, for having the company purchase and furnish a lavish apartment in Paris for her personal use on her twice-yearly trips there, and for excessive stock options. Using meta-analytic techniques, we have uncovered findings that help to settle some of those answers. b. ensure that the interests of top-level managers are aligned with the interests of shareholders. d.reduce the size of the stock option package provided to Mr. Leagreet. b. CamCell may have to over-compensate its CEO in order to offset the personal risk a CEO would undertake under this plan. a. less common than data values close to the mean. b. internal auditing scrutiny has improved and there is greater trust in financial report-ing. Diversity doesnt matter as much on boards where members perspectives are not regularly elicited or valued. We find that companies are not any less profitable after appointing female directors to the board than they were prior to the appointment. a. Satyam's stock price suffered a significant decline. a. setting the option strike price substantially higher than the current stock price. The CEO genuinely seeks their greater involvement. If these dynamics occur within corporate boards, boards may not take full advantage of their own cognitive variety. "Managerial employment risk is the: b. a standstill agreement. b. government auditors. d.This type of plan is likely to cause the CEO to underinvest in R&D in order to boost CamCell's long-term profitability. Why or why not? One means that is considered to improve the effectiveness of outside directors is

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