55. The Cadbury report, established by Sir Adrian Cadbury in 1992 to address financial
aspects of corporate governance, recommended:
56. A feature of the King I report on corporate governance, established by Mervyn King in
1994, is that _____.
57. The King II report, released by the committee formed by Mervyn King, on corporate
governance:
58. One of the common characteristics of the King I and King II reports on corporate
governance was that _____.
59. Which of the following is true of the “comply or explain” approach to corporate
governance?
60. The “comply or explain” approach to corporate governance was problematic because
_____.
61. The _____ of 2002 incorporates the “comply or else” approach to corporate governance.
62. Which of the following is true of the “comply or else” approach to corporate governance?
63. In what way did the “comply or else” approach differ from the “comply or explain”
approach to corporate governance?
64. Merging the roles of the chief executive officer and the chairperson of the board of an
organization is advantageous because _____.
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65. Which of the following is an effect of merging the roles of the chief executive officer and
the chairperson of the board?
66. The merging of the roles of the chief executive officer and the chairperson of a board is
inadvisable because _____.
67. Which of the following is true of the CRAFTED principles of governance?
68. Which of the following actions is a step toward running a company successfully?
69. Which of the following principles should a company follow for effective corporate
governance?
70. Walter Salmon’s checklist to assess the quality of the board recommends:
71. Which of the following is true of ethical misconduct?
72. The fiduciary responsibility of a manager is ultimately based on his or her _____.
73. Which of the following is true of managers in an organization with good corporate
governance?
74. A commitment to good corporate governance:
75. Which of the following checks, when in place, reduces the risk of fraud or unethical
behavior in a corporation?
76. _____ is about the way in which boards oversee the running of a company by its
managers and how board members are, in turn, accountable to shareholders and the
company.
77. The _____ of an organization is staffed by members of the board of directors plus
independent or outside directors.
78. The Cadbury report, established to address financial aspects of corporate governance,
argued for a guideline of _____, which gave companies the flexibility to act in accordance with
governance standards or clarify why they do not in their corporate documents.
79. The first step in a policy of disregarding the corporate governance model is the decision
to:
80. If the board of an organization is to serve its purpose in setting the operational tone for
the organization, it should be composed of members who:
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-05 Identify an appropriate corporate governance model for an organization.
Fill in the Blank Questions
81. _____ is the process by which organizations are directed and controlled.
82. The involvement of individual shareholders as owners of an organization helps increase
the _____ of managers.
83. A board of directors is a group of individuals, elected by the vote of _____ at the annual
general meeting, who oversee the governance of an organization.
84. A _____ is elected by the owners of a company to represent their interests in the effective
running of the company.
85. _____ members of a board of directors hold management positions in a company.
86. The _____ committee of an organization is responsible for monitoring the financial policies
and procedures of the organization.
87. The primary responsibility of the _____ committee of an organization is to oversee the
compensation packages for the senior executives of the organization.
88. The corporate governance committee of an organization oversees compliance with the
company’s internal _____ as well as any federal and state regulations on corporate conduct.
89. The focus of the _____ report, established in 1992, on corporate governance was on
internal governance.
90. The _____ report, released by the committee formed by Mervyn King, formally recognized
the need to move the stakeholder model forward and consider a triple bottom line as opposed to
the traditional single bottom line of profitability.
91. The King II report, released by the committee formed by Mervyn King, recommended
moving beyond the traditional single bottom line of _____.
92. The triple bottom line advocated by the King II report, released by the committee formed
by Mervyn King, recognizes the economic, environmental, and _____ aspects of a company‘s
activities.
93. The “_____” approach to corporate governance gave companies the flexibility to comply
with governance standards or explain their noncompliance in their corporate documents.
94. The Sarbanes-Oxley Act of 2002 incorporates the “_____” approach to corporate
governance.
95. The “_____” approach to corporate governance requires companies to abide by a set of
operating standards or face stiff financial penalties.
96. The argument in favor of merging the roles of the CEO and chairperson is one of _____.
97. INSEAD, the European business school, offers the _____ principles of corporate
governance.
98. _____ recommended a checklist of 22 questions to assess the quality of boards of
directors in his Harvard Business Review article.
99. Running a company of any size effectively requires the board of directors to work with the
_____, making constant evaluations of risk-versus-reward scenarios.
100. Corporate governance is about managers fulfilling a _____ responsibility to the owners of
their companies.
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-05 Identify an appropriate corporate governance model for an organization.
Essay Questions
101. What is corporate governance? Why it is important?
102. What roles do the audit committee and the compensation committee of an organization
play in ensuring good governance?
103. In what way did the King I approach on corporate governance differ from the Cadbury
approach?
104. Explain the “comply or explain” guideline. Why did the “comply or else” policy come into
force?
105. Does a commitment to good corporate governance affect a company’s profitability?