HRM 446 Corporate Governance Quiz
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Questions and Answers

Which framework considers corporate governance as the pursuit of organizational goals efficiently?

  • normative
  • goal-oriented (correct)
  • productivity-oriented
  • behavioural
  • How do Shleifer and Vishny (1997) classify the perspective of corporate governance?

  • normative
  • goal-oriented (correct)
  • behavioural
  • productivity-oriented
  • What is the primary cause of the agency problem in corporate governance?

  • shareholders being board members
  • separation of power between shareholders and board directors (correct)
  • involvement of shareholders in management
  • concentration on capital growth of shares and dividend income
  • Who is described as having made available capital to a firm in return for fixed interest?

    <p>bondholder</p> Signup and view all the answers

    Which of the following is NOT a symptom of poor corporate governance practices?

    <p>contact with shareholders</p> Signup and view all the answers

    The Theory of... is associated with Adam Smith's work on corporate governance.

    <p>invisible hands</p> Signup and view all the answers

    The South Sea Bubble, an early corporate governance failure, occurred in which century?

    <p>17th century</p> Signup and view all the answers

    Which scandal is considered to have influenced modern corporate governance practices?

    <p>Enron</p> Signup and view all the answers

    Study Notes

    Corporate Governance Overview

    • Corporate governance focuses on ensuring the efficient pursuit of an organization's goals and missions, rooted in its fundamental statutes and charter.
    • Terminology includes various perspectives, such as normative, productivity-oriented, behavioral, and goal-oriented.

    Definitions and Perspectives

    • Shleifer and Vishny's definition of corporate governance emphasizes investor assurance in receiving returns on investments, categorized as a normative perspective.

    Agency Problem

    • The agency problem, a significant challenge in corporate governance, stems from the separation of power between shareholders and the board of directors, leading to potential conflicts of interest.

    Investor Types

    • A bondholder is specifically defined as an investor providing capital to a firm in exchange for a fixed interest rate, differentiating them from shareholders and stockholders.

    Symptoms of Poor Governance

    • Observable signs of ineffective corporate governance include:
      • Domination by a single individual.
      • An excessive focus on short-term goals.
      • Lack of independent scrutiny.
    • Contact with shareholders is not considered a symptom of poor governance.

    Historical Context

    • The origins of corporate governance theory trace back to Adam Smith's work, notably the Theory of the Invisible Hand, promoting free-market principles.
    • The South Sea Bubble scandal serves as an early example of governance failure, occurring in the 18th century.

    Contemporary Developments

    • The Watergate scandal marked a pivotal point in corporate governance history, leading to reforms.
    • The Treadway Report underscored the importance of establishing a proper control environment alongside the necessity for independent audit committees and objective assessments.

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    Description

    Test your knowledge on Corporate Governance with this quiz designed for HRM 446 at the University of Education, Winneba. Attempt all questions and select the correct answers from the provided options. This quiz spans a range of topics relevant to corporate governance principles.

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