b. likely to gain financially if their employing firm is taken over by another. a. greenmail. An executive's decisions often affect firm performance only over the long run. The average correlation between CEO gender and long-term financial performance is .007. b. c. pressure the board of directors to reprice their stock options. ANS: D PTS: 1 DIF: Medium d. a. Let This will have no effect on the stock option plan design discussion, because CalPERS' main concern is stock dividends. p:p:p: The temperature is 9090^{\circ}90. According to a 2016 Bloomberg analysis, five of the biggest U.S. activist funds had succeeded in getting over 100 board members appointed in the previous five years. German executives are not dedicated to the maximization of shareholder value largely because: All of the following are unintended consequences of the Sarbanes-Oxley Act EXCEPT: 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. They prefer to start from a position of trust. On January 1, California law said that all locally headquartered publicly traded companies must have at least one female director by 2020. The top management team at Sierra Infusion is concerned about the declining performance of firms in their industry. a. increased diversification of Sierra Infusion. c. lobby legislators to pass laws that are aligned with the organization's interests. Researchers studied 1,644 public companies. His current boards are shifting to a different approach: a process of assessment where you periodically look at the skill sets that you would ideally want on the board, given the business its in, and then the skill sets you have, and you identify any missing. b. a poison pill. b. control b. A recent study, of board composition and financial data on 1,644 public companies in the United States between 1998 and 2011, finds that companies that appoint women to the board are no more profitable than those that do not. Diversity wins is the third report in a McKinsey series investigating the business case for diversity, following Why diversity matters (2015) and Delivering through diversity (2018). b. small; large d. outside directors own significant equity in the organization. There was, however, a difference in the perceived goals of the company. 5 a. bonuses. The two meta-analyses reached very similar conclusions, despite the differences in the underlying studies (140 studies vs. 20, etc.). A majority of the directors are concerned that while Mr. Leagreet has been re-sponsible for the firm's earning above-average returns, he has been displaying a tendency to-ward personal extravagance at the firm's expense. b. inside c. financial institutions such as mutual funds and pension funds that control large-block shareholder positions. a. organizational performance. b. selecting new CEOs. c. Corporate governance mechanisms can be in conflict with one another. c. the employees directly involved in the wrongdo-ing. Its worth noting that even if the meta-analyses revealed a stronger relationship between board gender diversity and firm performance, we couldnt conclude that board gender diversity causes firm performance. When executives have ownership positions or stock options with their employing firm, they are: But firms expecting a financial performance boost simply by increasing female board representation may end up disappointed. One interviewee talked about the importance of respectful disagreement, acknowledging mishaps in communication, and in valuing different perspectives: I havent had anybody shut me down or shut other people down. Boards of directors are now becoming more involved in In other words, investors seem to be penalizing, rather than rewarding, companies that strive to be more inclusive. Evidence that board diversity benefits firms, however, has been mixed. d. ownership of a company to a second party. 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 company for takeover is called: d. made up of CPAs with auditing experience. In McKinsey's previous studyconducted with 2014 numbersthat increase had been 35%. As we said, directors generally don't really want to monitor, and they are not sure if they can do so effectively. They are more a function of general market conditions. d.is eliminated. 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. c. remains constant. Rigorous, peer-reviewed studies suggest that companies do not perform better when they have women on the board. a. increases shareholder value significantly. While the relationship between board gender diversity and company performance is very weak, there appears to be a somewhat stronger relationship between board gender diversity and corporate social responsibility (CSR). The relationship between CEO gender and long-term company performance is statistically significant, the authors find, but tiny. They also raised. Historically, ____ have been at the center of German corporate governance structure. 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. One shared: I have some influence, and Im trying to exert my influence.. Knowledge at Wharton is an affiliate of the Wharton School of the University of Pennsylvania. b. b. returned to them as dividends. A 2015 meta-analysis of 140 research studies of the relationship between female board representation and performance found a positive relationship with accounting returns, but no significant relationship with market performance. d. a system of cross-shareholding among firms. Compute answers to three decimal places. And in many cases, this might mean recruiting board members outside of existing networks. Research suggests that boards of directors perform better ifa. a. b. government auditors. "International Food Services (IFS) has a contract with the Marines to supply meals for it troops in Iraq and other foreign assignments. The chapter Opening Case indicates that many CEOs earn more than ____times the amount re-ceived by their firm's lowest-paid employee. Compared to managers, shareholders prefer b. long-term incentives such as stock options. b. risk undertaken by managers to earn stock options. a. some foreign firms have delisted on U.S. stock exchanges. Which of the following reasons would NOT explain the difficulty of determining appropriate executive compensation? a. More Evidence That Company Diversity Leads To Better Profits - Forbes a. some foreign firms have delisted on U.S. stock exchanges. The CEO and the top executives successfully fended off the takeover and are concentrating on strategies to improve the performance of the firm. a. ownership concentration. b. stock brokerage companies. c. 50 c. crossing the palm with silver. Annual U.S. beer production data is given below. Our latest report shows not only that the business case remains robust but also that the relationship between diversity on executive teams and the likelihood of financial outperformance has strengthened over time. Ditto for studies of the gender diversity of the top management team. a. the firm is overpriced in the market. c. Institutional investors disapprove of long-term executive incentive plans and they may sell their blocks of stock in CamCell. b. The chapter Opening Case suggests that ___________ is (are) frequently blamed for high CEO pay during periods where corporate performance has been poor. Hostile takeover attempts are so common that they do not reflect negatively on the firm's performance. Research suggests that boards of directors perform betterif a. the CEO is also the chairperson of the board ofdirectors. b. a. usually on the verge of bankruptcy. d. the opportunity for higher compensation through firm growth, a reduction in managerial employment risk. The average correlation between board gender diversity and firm accounting performance, Post and Byron found, was .047. a. a. generate free cash flows, reduce the risk of total firm failure c. increased shareholder participation in decision making. A majority of the directors are concerned that while Mr. Leagreet has been responsible for the firm's earning above-average returns, that he has been displaying a tendency toward personal extravagance at the firm's expense. "The board of directors of CyberScope, Inc., is designing a stock option plan for its CEO that will motivate the CEO to increase the market value of the firm. a. boards of directors. Idea diversity is also important., To offset these concerns, some boards are ensuring that skills and expertise, along with demographics, are front and center in their recruiting processes. The directors are all outsiders, experienced, and run their own successful firms. c. Competition 47; Gender-diverse boards also tend to adopt more progressive organizational management practices, such as work-life support programs, which increase employee satisfaction. Research suggests that boards of directors perform - Course Hero b. the addition of outside directors to the board. The correlation is .03. d.risk managers will not find a new top management position if they should be dismissed. c. the banks owing the largest shares of stock in the firm. As an illustration, I show that two current measures of board of director performance, board meeting activity and director attendance, suggest that the boards of Asian firms do not compare favorably to the boards of firms from developed markets. If so, board gender diversity may be positively related to accounting returns, but not market returns. Many boards continue to recruit directors from the pool of current or former CEO/CFOs, and changing demographics within these pools do present opportunities to recruit more diverse members. Research has found little to no evidence supporting the idea that companies with female board directors perform better than companies run by all-male boards. d. the top management team's interests and the owners' interests are aligned. d.prevented by the Sarbanes-Oxley Act from owning more than 50% of the stock of any one firm. a. determine and control the strategic direction of an organization, so that the top executives are focused on maximizing corporate profits. Despite popular press accounts that suggest that teams high in gender diversity outperform those composed only of men or only of women, rigorous research does not support this conclusion. d. ownership of a company to a second party. Why Investors React Negatively to Companies That Put Women on Their Boards the board is homogenous in composition. d.governmental relations. b. large institutional investors control large blocks of stock. Both the Pelzer purchase and the Alvarez sale were in transit at year-end. We found no difference in the perceived competence of Marilyn and Jack, which was not surprising given their identical bios. The average correlation between board gender diversity and firm market performance (such as stock performance, shareholder returns) was even smaller and was not statistically significant. | Brian Berkey. Several members of the board of directors of American Textile Products (ATP) have proposed creating the position of lead director. Historically, ____ have been at the center of the German corporate governance structure. 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 CEO tended to dominate the conversation. Monitoring by shareholders is usually accomplished through The report looked at S&P 500 companies that released full-year 2020 results as of May 31, 2021, analyzing their performance between 2018 and 2020. c. not correlated with Write the statements in symbolic form . "The board of directors of CamCell, Inc., wishes to design a CEO compensation plan that will align the personal interests of the CEO with the interests of the shareholders in long-term firm performance.
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