161<Q>The agency problem underlies the need for sound corporate governance.
In
this context, the “agents” are the company’s:
<A>Customers.
Shareholders.
Directors.
Auditors.
<R>3
<T>1
162<Q>The agency problem underlies the need for sound corporate governance. In
this context, the “principal” in this agency relationship is:
<A>customers.
shareholders.
managers.
directors.
<R>2
<T>1
163<Q>In seeking to address the problem of the separation of ownership and
control, corporate governance attempts to align the interest of which of the
following pair of stakeholders?
<A>Shareholders and Regulators.
Shareholders and Managers.
Managers and Regulators.
Shareholders and Auditors.
<R>2
<T>1
164<Q>Which of the following is concerned with overall control to ensure that the
company can achieve its objectives in an acceptable and sustainable way?
<A>Governance.
Management.
Marketing.
Financing.
<R>1
<T>1
165<Q>How entities are systematically directed and controlled refers to which of
the following?
<A>Corporate governance.
Sustainability.
Agents.
Internal controls.
<R>1
<T>1
166<Q>The agency problem concerns the misalignment in interests and conflicts
of interest between:
<A>banks and financial markets.
regulators and professional bodies.
government and industry.
directors and shareholders.
<R>4
<T>1
167<Q>From the public policy perspective, which of the following is NOT the
main aim of corporate governance to ensure that the company meets?
<A>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.
<R>4
<T>1
168<Q>Which of the following is NOT true about the aim of corporate
governance? Corporate governance is to ensure that the company meets:
<A>The objectives of its shareholders.
The interest of other individuals and groups with a direct “stake” in the company.
The interests of the public at large.
The interest of only managers.
<R>4
<T>1
169<Q>Which of the following is NOT the symptom of conflicts between
stakeholders’ interests?
<A>Financial collapse without warning.
Directors trying to disclose the true financial performance of the company.
Disputes over directors’ remuneration such as huge salaries, bonuses.
Empire building.
<R>2
<T>1
170<Q>Which of the following is NOT the perspective on corporate governance?
<A>Customer perspective.
Stakeholder perspective.
Stewardship perspective.
Public policy perspective.
<R>1
<T>1
171<Q>Which of the following is NOT included in key elements of corporate
governance?
<A>External auditors.
Internal auditors.
Senior management.
Government.
<R>4
<T>1
172<Q>Which of the following is NOT the symptom of poor corporate
governance?
<A>Inadequate control function.
Lack of supervision of employees.
Misleading financial statements and information.
Emphasis on long-term profitability.
<R>4
<T>1
173<Q>Which of the following is NOT the symptom of poor corporate
governance?
<A>Adequate control function.
Lack of independent scrutiny by external or internal auditors.
Lack of contact with shareholders.
Domination of the board.
<R>1
<T>1
174<Q>Which of the following is NOT a good practice in corporate governance?
<A>Good internal controls and risk management.
Openness and transparency.
Increasing the potential for conflict.
Accountability in judging directors’ performance.
<R>3
<T>1
175<Q>Good practice in corporate governance is LEAST LIKELY concerned with:
<A>Risk management.
Unethical and unsustainable behaviors.
Transparency.
Reducing the potential for conflict.
<R>2
<T>1
176<Q>Regarding the effect of the financial system on governance, which of the
following is a type of financial system?
<A>Market-based system.
Indirect investment system.
Direct investment system.
Household-based system.
<R>1
<T>1
177<Q>In the country of Zana, the population has a risk-seeking attitude towards
financial matters. Zana’s financial system is likely to be?
<A>a market-based system.
a stakeholder system.
a bank-based system.
a public policy system.
<R>1
<T>1
178<Q>A German company, Albrecht AG, has a dual board structure for its board
of directors. This means that, in addition to the supervisory board, the company
also operates a:
<A>Unitary board.
Management board.
Non-executive board.
Auditing board.
<R>2
<T>1
179<Q>Business ethics are primarily molded by the expectations of:
<A>directors.
customers.
government.
society.
<R>4
<T>1
180<Q>The interest conflict between managers and shareholders refers to:
<A>Information problem.
Communication problem.
Gender problem.
Agency problem.
<R>4
<T>1
181<Q>If managers spend the company’s budget on luxury vacations and high-end
products, this refers to:
<A>Controlling problem.
Gender problem.
Agency problem.
Communication problem.
<R>3
<T>1
182<Q>The contractual relationship between managers and shareholders is:
<A>Bailor and bailee.
Employer and employee.
Agent and principal.
Receivable and Payable.
<R>3
<T>1
183<Q>The system by which companies are directed and controlled is:
<A>Management system.
Information system.
Payroll system.
Corporate governance.
<R>4
<T>1
184<Q>“Doing the right things” mentions:
<A>Management.
Customer relation.
Governance.
Public relationship.
<R>3
<T>1
185<Q>“Getting things done right” mentions:
<A>Governance.
Public relationship.
Management.
Customer Care.
<R>3
<T>1
186<Q>Which of the following is NOT a perspective on corporate governance?
<A>Public policy perspective.
Stakeholder perspective.
Stewardship perspective.
Management perspective.
<R>4
<T>1
187<Q>The public policy perspective on corporate governance requires senior
management to:
<A>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.
<R>1
<T>1
188<Q>The stewardship perspective on corporate governance requires senior
management to:
<A>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.
<R>4
<T>1
189<Q>A structured system for the direction and control of a company that
specifies the distribution of rights and responsibilities between stakeholders is:
<A>Management system.
Corporate governance.
Information system.
Risk management system.
<R>2
<T>1
190<Q>Corporate governance of a company in which all the directors receive
bonuses based on annual profits faces the problem of:
<A>Domination by a small group.
Inadequate control function.
Emphasis on short-term profitability.
Misleading financial statements.
<R>3
<T>1
191<Q>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:
<A>Domination by a small group.
Inadequate control function.
Lack of supervision.
Misleading financial statements.
<R>3
<T>1
192<Q>Corporate governance of a company in which finance directors manipulate
the accounts to hide irrecoverable debts faces the problem of:
<A>Domination by a small group.
Inadequate control function.
Lack of supervision.
Misleading financial statements and information.
<R>4
<T>1
193<Q>Corporate governance of a company in which the CEO, CFO, and Chief
Accountant are siblings faces the problem of:
<A>Domination by a small group.
Inadequate control function.
Lack of supervision.
Misleading financial statements.
<R>1
<T>1
194<Q>In good corporate governance, the Board
of Directors comprises:
<A>Executive Directors, Non-executive directors, Senior management.
Executive Directors, Non-executive directors, Shareholders.
Executive Directors, Non-executive directors, Committees of the board.
Executive Directors, Non-executive directors, workforce.
<R>3
<T>1
195<Q>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?
<A>Directors.
Internal audits.
External audits.
Employees.
<R>3
<T>1
196<Q>Corporate values and culture are critical to good corporate governance
because:
<A>It affects individual behavior.
It reduces the income level of employees.
It puts the decision of the board into effect.
It ensures the interest of managers.
<R>1
<T>1
197<Q>Which of the following is NOT characteristic of a bank-based financial
system?
<A>Banks are highly concentrated and integrated.
Banks and businesses have a close relationship.
Households have great access to housing.
Households are risk-avoidance.
<R>3
<T>1
198<Q>Which of the following is NOT characteristic of a bank-based financial
system?
<A>Banks and businesses are highly integrated.
Household prefers to bear little risk.
Comparatively more government intervention.
Banks have fewer close relationships with businesses.
<R>4
<T>1
199<Q>Which of the following is the characteristic of a market-based financial
system?
<A>Banks are highly concentrated and integrated.
Banks and businesses have a close relationship.
Households prefer to hold equity securities.
Households are risk-avoidance.
<R>3
<T>1
200<Q>Which of the following is the characteristic of a market-based financial
system?
<A>Household prefers to bear little risk.
Comparatively more government intervention.
Markets are more important than banks in lending businesses.
Bank lending is the most important source of business finance.
<R>3
<T>1
201<Q>Organizations that invest money on behalf of other people are:
<A>Commercial banks.
Individual shareholders.
Security companies.
Institutional shareholders.
<R>4
<T>1
202<Q>Governance structure which adopts the principles of good corporate
governance such as OECD’s Principle of Corporate Governance is:
<A>Shareholder-led approach.
Principle-based approach.
Management-dominated approach.
Regulation-based approach.
<R>2
<T>1
Lâm
203<Q>The presence of the management board and the supervisory board is:
<A>The unitary structure.
The dual structure.
The single board.
The sole structure.
<R>2
<T>1
204<Q>Germany governance structure is a typical example of:
<A>The unitary structure.
The dual structure.
The single board.
The sole structure.
<R>2
<T>1
205<Q>A business culture reflects:
<A>The paying scheme for directors and managers.
The structure of the board.
The basic values and beliefs of a company.
The commitment of the business to its stakeholders.
<R>3
<T>1
206<Q>Corporate responsibility refers to:
<A>The structure of the board.
The basic values and beliefs of a company.
The commitment of the business to its stakeholders.
The principles for the governance structure.
<R>3
<T>1
207<Q>Which of the following pairs of factors are likely to enable managers to run
a company in their own interests (Agency problem)?
<A>Low levels of management accountability and shareholders access to the same
information as management.
High levels of management accountability and managers access better information
than shareholders.
High levels of management accountability and shareholders access to the same
information as managers.
Low levels of management accountability and managers access better information
than shareholders.
<R>4
<T>1
<G>Chapter 11: Application – Analysis
208<Q>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?
<A>The public policy perspective.
The corporate perspective.
The stakeholder perspective.
The stewardship perspective.
<R>4
<T>1
209<Q>The stakeholder perspective on corporate governance means:
<A>A balance between economic and social goals and between individual and
communal goals
Senior management should balance the interest of shareholders with those of other
stakeholders to achieve long-term sustained value for shareholders.
Directors act in the best interest of the company when acting as “stewards” of the
company’s resources.
Directors disguise the true financial performance of the company from
shareholders.
<R>1
<T>1
210<Q>The corporate perspective on corporate governance means:
<A>A balance between economic and social goals and between individual and
communal goals.
Senior management should balance the interest of shareholders with those of other
stakeholders to achieve long-term sustained value for shareholders.
Directors act in the best interest of the company when acting as “stewards” of the
company’s resources.
Directors disguise the true financial performance of the company from
shareholders.
<R>2
<T>1
211<Q>The stewardship perspective on corporate governance means:
<A>A balance between economic and social goals and between individual and
communal goals.
Senior management should balance the interest of shareholders with those of other
stakeholders to achieve long-term sustained value for shareholders.
Directors act in the best interest of the company when acting as “stewards” of the
company’s resources.
Directors disguise the true financial performance of the company from
shareholders.
<R>3
<T>1
212<Q>Which of the following is a symptom of a serious conflict of interests?
<A>The directors act in the best interests of the company.
Managers account to shareholders for their stewardship of the company’s
resources.
A board of directors makes decisions to satisfy their own wish for more power and
rewards rather than considering the interests of shareholders.
Directors’ rewards and bonuses vary according to the company’s performance.
<R>3
<T>1
213<Q>Bank-based financial systems can be characterised by:
<A>Banks are highly concentrated and integrated in terms of providing both
banking and non-banking services.
Bank lending is the least important source of business finance.
Banks and businesses are less integrated.
Households prefer to bear more risk and so hold more equity.
<R>1
<T>1
214<Q>Market-based financial systems are NOT characterised by:
<A>Households bear more risk and so hold more equity.
Households have greater access to investments in physical assets.
Markets are more important than banks for long-term finance.
Banks have close relationships with the businesses they lend to.
<R>4
<T>1
215<Q>The corporate perspective on corporate governance requires senior
management to:
<A>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.
<R>3
<T>1
216<Q>The stakeholder perspective on corporate governance requires senior
management to:
<A>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.
<R>2
<T>1
217<Q>Encouraging the efficient use of resources through efficient investment
reflects:
<A>The public policy perspective.
B. The stakeholder perspective.
The corporate perspective.
The stewardship perspective.
218<Q>In good corporate governance, monitoring and judging directors’
performance based on the returns that the company has achieved under their
stewardship ensures:
<A>Management ethics.
Interest of managers.
C. Management accountability.
Management Openness.
<R>3
<T>1
219<Q>In good corporate governance, disclosure of information ensures:
<A>Management ethics.
Interest of managers.
C. Openness and Transparency.
Management Accountability.
<R>3
<T>1
220<Q>The workforce is critical to good corporate governance because:
<A>It affects the ethical behavior of individuals in a company.
It puts the decision of the board into effect.
It supports the long-term sustainable success of a company.
It provides an evaluation of financial statements.
<R>3
<T>1
221<Q>To ensure good corporate governance, employees should:
<A>Reduce the working time in order to supervise the management.
Go on a strike for a higher wage.
C, Raise concerns about potential ethical problems.
Share the company’s private information with competitors.
<R>3
<T>1
222<Q>Which of the following is NOT characteristic of a bank-based financial
system?
<A>Banks and businesses are highly integrated.
Household prefers to bear little risk.
Comparatively more government intervention.
D. Markets are more important than banks in lending businesses.
<R>4
<T>1
223<Q>Which of the following is the characteristic of a market-based financial
system?
<A>Banks and businesses are highly integrated.
Comparatively more government intervention.
C. Banks have fewer close relationships with businesses.
Household prefers to deposit with banks
<R>3
<T>1
224<Q>The set of legal or regulatory methods put in place to ensure effective
corporate governance is:
<A>Corporate structure.
Board structure.
Management structure.
D. Governance structure.
<R>4
<T>1
225<Q>There are two statements about governance structure:
“All companies in the world must adopt statutes in governance structure”
“Different countries use different combinations of statutes and codes of practice”.
Which of the following statement is TRUE?
<A>(1) is correct and (2) is incorrect.
Both (1) and (2) are correct.
Both (1) and (2) are incorrect.
D. (1) is incorrect and (2) is correct.
<R>4
<T>1
226<Q>In a dual governance structure, the management board has the power to:
<A>Manage the company.
Appoint and remove members of the management boards.
Perform independent reviews.
Inspect books and records.
<R>1
<T>1
227<Q>The stewardship approach to corporate governance requires directors of
limited companies:
<A>to act at all times in the best interest of the company.
to allow shareholders to see detailed accounting records on request.
to hold regular monthly meetings to answer shareholders' questions.
to consult the shareholders over difficult management decisions.
<R>1
<T>1
228<Q>Good practice in corporate governance requires that openness and
transparency should be supported by:
<A>reducing the potential for conflicts of interest.
B. disclosure of information.
reconciling the interests of shareholders and directors.
judging the performance of directors on the basis of return on investments.
<R>3
<T>1
229<Q>Which of the following is a list of the five key elements of good corporate
governance?
<A>Board of directors, senior management, employees, external auditors, and
internal auditors.
B. Senior management, shareholders, employees, external auditors, and internal
auditors.
C. Board of directors, senior management, shareholders, external auditors, and
internal auditors.
D. Senior management, stakeholders, external auditors, internal auditors, and
government, regulators.
<R>3
<T>1
KLinh
230<Q>Bank-based financial systems are NOT characterised by:
<A>Households have less access to investments in physical assets such as housing.
Bank lending is the most important source of business finance.
Banks and businesses are highly integrated.
Markets are stable.
<R>4
<T>1
231<Q>In a bank-based financial system, the financial system will be characterised
by:
<A>The households have greater access to investments in physical assets than a
market-based financial system.
Comparatively less government regulation than a market-based financial system.
Comparatively more close relationships between banks and businesses than in a
market-based financial system.
Comparatively less integration of baking and non-banking services than a market-
based financial system.
<R>3
<T>1
232<Q>Which of the following statement is TRUE for a dual board structure?
<A>In a dual board structure, the management board is responsible for both
management of the business and supervision of all business and financial matters as
requested by shareholders.
A dual board structure comprises 2 types of boards which are the management
board and the supervisory board.
A dual board structure comprises 2 types of boards which are the unitary board and
the supervisory board.
In a dual board structure, the management board has the power to appoint and
remove members of the supervisory board.
<R>2
<T>1
233<Q>A German company, Guttheim AG, has adopted a dual board structure for
its board of directors. This means that the company’s supervisory board will have
been elected by:
<A>The management board.
The company’s shareholders.
The company’s shareholders and directors.
The company’s shareholders and employees.
<R>4
<T>1
234<Q>The directors of Clamin plc state in the annual report that they comply with
the requirements of the UK Corporate Governance Code. This is because they
believe that the aim of the company is to balance economic and social goals, and
individual and communal goals by encouraging the efficient use of resources
through efficient investment. The directors of Clamin plc have adopted the:
<A>Corporate perspective on corporate governance.
Public policy perspective on corporate governance.
Stewardship perspective on corporate governance.
Stakeholder perspective on corporate governance.
<R>4
<T>1
235<Q>WM plc adopts corporate responsibility as a key element in its strategies.
This will mean that the company seeks to:
<A>meet the minimum obligations it owes to stakeholders.
exceed the minimum obligations it owes to stakeholders.
meet the minimum obligations it owes to shareholders.
exceed the minimum obligations it owes to shareholders.
<R>2
<T>1
236<Q> Golden plc is a company that makes sweets targeted at children. The
company advertises the product during prime-time children’s television programs
and popular Youtube channels with a high number of child subscribers. Its targeting
of children has been branded as ‘unethical’. Which business function is impacted
by this ethical issue:
<A> Operations.
Procurement.
Human resources.
Marketing.
<R>4
<T>1
<G>Chapter 11: Synthesis and Judgement
237<Q>In comparison with the corporate and the public policy perspectives on
corporate governance, the stakeholder perspectives place the LEAST emphasis on:
<A>accountability.
alignment of interests of shareholders and other stakeholders.
good information.
efficient use of resources.
<R>3
<T>1
238<Q>The board of directors of LK plc is concerned that the current chief
executive's actions are undermining the ethical culture at the company. She fails to
listen to the concerns of managers about the unfair treatment of suppliers, and she
has failed to learn from a recent scandal in which the company was fined for data
protection breaches. To improve the ethical culture at LK plc, which of the
following is the most important action for the board to take?
<A>Draft a code of business ethics for LK plc's employees.
Rewrite LK plc's policies regarding suppliers and customers.
Demonstrate leadership by encouraging LK plc's chief executive to be more open.
Brief shareholders more fully about LK plc's incentive scheme for managers.
<R>3
<T>1
239<Q>In ABC plc, the chairman is Jonathan, and the CEO is his daughter. All the
directors receive bonuses based on annual profits. The company’s sales are made
by individual salespeople who routinely bypass the company’s strict credit check
procedures, which leads to several irrecoverable debts. From this information, what
are the likely corporate governance issues at ABC plc:
<A>Domination by a small group.
Emphasis on short-term profitability.
Lack of supervision of employees.
Domination by a small group; Emphasis on short-term profitability; Lack of
supervision of employees.
<R>4
<T>1
240<Q>Which of the following statements about whistle-blowing is/are true?
Statement (1): Whistle-blowing involves the disclosure by an employee of illegal or
unethical behaviour in the workplace.
Statement (2): Employees should always report concerns about unethical behaviour
to their line manager in the first instance.
<A>Neither of them.
Statement (1) only.
Statement (2) only.
Both of them.
<R>2
<T>1
241<Q>The following statements concern principles for business ethics.
Statement (1): The Nolan Principles include integrity, objectivity, accountability,
openness, and honesty.
Statement (2): The Institute of Business Ethics’ ethical values include respect,
transparency, fairness, openness, and trust.
Identify whether each statement is accurate.
<A>Statement (1) is accurate; Statement (2) is inaccurate.
Statement (1) is inaccurate; Statement (2) is inaccurate.
Statement (1) is accurate; Statement (2) is accurate.
Statement (1) is inaccurate; Statement (2) is accurate.
<R>3
<T>1
242<Q>Which of the following is NOT identified by the Institute of Business
Ethics as an attribute of ethical leaders?
<A>Openness.
Ability to listen.
Courage.
Respect.
<R>4
<T>1
