Corporate Governance Evolution Quiz

Play an AI-generated podcast conversation about this lesson

What did Sony's management organization do to mirror U.S. firms' practices?

Adopted a salary-centric approach for compensation of the CEOs where CEO pay was not strongly linked to firm size or performance

Implemented the Corporate Governance Code and the Stewardship Code, increasing institutional investors' influence in firms' governance

Maintained a stable ownership structure with significant bank holdings and reciprocal corporate cross-shareholdings

Delegated implementation to executive officers while the board focused on decision-making and strategic supervision (correct)

What was the response to Sony's move to mirror U.S. firms' practices?

It had no significant impact on other Japanese firms

It led to a decline in institutional investors' influence in firms' governance

It was met with resistance and criticized by business journalism

It was well-received by business journalism and prompted many other Japanese firms to follow suit (correct)

Which of the following is NOT a unique feature of the traditional Japanese model of corporate governance?

Trading-ties-based corporate groups (e.g., a horizontally structured keiretsu through the main banks or a vertically structured keiretsu)

CEO compensation strongly linked to firm size and performance (correct)

Stable employment relationships

Stable ownership structure with significant bank holdings and reciprocal corporate cross-shareholdings

What did the Japanese government initiative in 2014 aim to achieve?

Increasing the influence of institutional investors in firms' governance Signup and view all the answers

What was the traditional approach to CEO compensation in the Japanese model of corporate governance?

CEO pay was salary-centric and not strongly linked to firm size or performance Signup and view all the answers

Which of the following was a key feature of the traditional Japanese model of corporate governance?

Trading-ties-based corporate groups (e.g., a horizontally structured keiretsu through the main banks or a vertically structured keiretsu) Signup and view all the answers

What strategic move did Olympus make to redirect its focus towards its core medical equipment sector?

Divested its imaging division to a U.S.-based firm Signup and view all the answers

Despite global M&A activity experiencing a decline, which region remained at the forefront of M&A investments?

The United States and Japan Signup and view all the answers

What prompted a re-evaluation of the insular and conservative structure of Japanese corporate governance?

Economic challenges in the 1990s Signup and view all the answers

When did the shift in corporate decision-making in Japanese firms begin?

Early 2000s Signup and view all the answers

What change in corporate governance reform allowed 'large' firms in Japan to adopt a U.S.-style corporate structure?

Introduction of a flexible approach Signup and view all the answers

What aspect of Japanese corporate culture was likely influenced by the deepening investment ties between Japan and the United States?

All of the above Signup and view all the answers

What was the primary focus of corporate directors and executives during the managerialist era?

Guiding the corporation in the interests of a wide range of stakeholders Signup and view all the answers

What was the primary reason for the challenges faced by managerial capitalism in the early 1970s?

Poor stock market performance Signup and view all the answers

What was the philosophical approach of the managerialist era, as described in the text?

Managerial capitalism Signup and view all the answers

What did the text suggest was the potential for during the managerialist era?

Managerial self-interest Signup and view all the answers

What did the text suggest was the outcome of the managerialist era?

Positive outcomes, with American corporations leading global markets and generating employment opportunities Signup and view all the answers

What did the text suggest was the role of legal frameworks during the managerialist era?

They discouraged personal financial gain at the expense of the corporation Signup and view all the answers

What is the primary goal of shareholder primacy theory?

Enhancing shareholder wealth Signup and view all the answers

Why did economic theorists criticize the passive role of dispersed shareholders in public corporations?

To reduce agency costs Signup and view all the answers

What belief forms the basis for shareholder primacy theory?

Shareholders are ultimate authorities Signup and view all the answers

What did the rise of the Chicago School of economists in the 1970s lead to regarding corporate governance?

Favored maximizing shareholder wealth Signup and view all the answers

According to Milton Friedman, what is the primary social responsibility of a business?

Increase profits Signup and view all the answers

What argument justifies shareholder primacy theory based on corporate profits?

Efficiency is measured by stock price Signup and view all the answers

Which of the following is likely to occur as Japanese corporations prioritize ESG considerations?

Increased transparency and disclosure practices Signup and view all the answers

What change is anticipated in executive compensation structures for Japanese companies?

Compensation will be tied to performance metrics aligned with strategic objectives Signup and view all the answers

Which of the following statements best describes the potential convergence of Japanese and U.S. corporate governance standards?

A gradual convergence is likely due to cross-involvement of governance practices Signup and view all the answers

What is the primary driver for the anticipated changes in Japanese corporate governance practices?

Influence of American shareholders and global trends Signup and view all the answers

Which of the following statements is NOT supported by the information provided in the text?

Japanese corporations have fully established an environment to be stakeholders in their companies Signup and view all the answers

Based on the information provided, what can be inferred about the future direction of Japanese corporate governance?

It will incorporate elements from both Japanese and U.S. models Signup and view all the answers