Introduction to Corporate Governance

What was the purpose of establishing the German Corporate Governance Code in 2002?

To remove independent members from the Aufsichtrat
To create new laws and regulations for German corporations
To reduce the power of the Aufsichtrat in German corporations
To summarize and increase transparency of existing laws and regulations for national and international investors (correct)

What is a key characteristic of the German Corporate Governance Code?

It repeats existing laws and regulations (correct)
It only applies to international investors
It requires the presence of only independent members in the Aufsichtrat
It sets new legal standards for German corporations

What is recommended for the selection and qualification of board members by the German Corporate Governance Code?

Only former members of management
Including only independent members
Only experienced and qualified members
No specific provision (correct)

What is the recommendation for the meeting frequency of the Aufsichtrat according to the German Corporate Governance Code?

More frequent meetings, including meetings of independent members only (A) Signup and view all the answers

What is the purpose of including independent members in the Aufsichtrat?

To provide efficient control (B) Signup and view all the answers

What is the purpose of the possibility to introduce performance-oriented payment elements for Aufsichtrat-members?

To establish a more performance-based remuneration system (C) Signup and view all the answers

Why do banks ask for directors to be personally liable in start-ups?

To reduce the risk of default for the bank (A) Signup and view all the answers

What is the primary reason for adding non-executive directors to a company's board?

To bring in external expertise and attract investors (A) Signup and view all the answers

Which type of board is typically found in non-profit organizations?

All non-executive director board (B) Signup and view all the answers

What is a characteristic of a unitary board?

Existence of a single board comprising executive and non-executive directors (B) Signup and view all the answers

In a dual board system, what is the role of the non-executive directors?

To supervise and monitor the executive directors (D) Signup and view all the answers

Which type of board is dominant in the UK and US?

Unitary board (C) Signup and view all the answers

What is one of the consequences of low share prices for a company?

It increases the risk of a hostile takeover (A) Signup and view all the answers

What is the purpose of target share repurchases in defense strategies?

To prevent a hostile takeover by buying shares from potential investors (A) Signup and view all the answers

According to the market for corporate control, what is the role of the stock market in relation to management performance?

It provides a means of control for management performance (C) Signup and view all the answers

What is the purpose of anti-takeover amendments in defense strategies?

To prevent a hostile takeover by requiring a supermajority (A) Signup and view all the answers

What is one of the reasons that may lead to a hostile takeover?

Poor management performance (C) Signup and view all the answers

What is the effect of the threat of a takeover on management performance?

It leads to better management performance (B) Signup and view all the answers

What is the primary objective of corporate governance?

To protect the interests of shareholders and other stakeholders (C) Signup and view all the answers

What are the external dimensions of corporate governance?

Laws and regulations, values and norms (A) Signup and view all the answers

What is the role of internal actors in corporate governance?

To direct and control the corporation (C) Signup and view all the answers

What is one of the important reasons why we need corporate governance?

To ensure that an appropriate system of control works within a company (A) Signup and view all the answers

What is the relationship between corporate governance and the objectives of a company?

Corporate governance provides the structure through which the objectives of a company are set and monitored (B) Signup and view all the answers

What is the primary concern of corporate governance with regards to stakeholders?

Concerned with the relationship between the board of directors, the management, the shareholders and other stakeholders (C) Signup and view all the answers

What proportion of independent directors should comprise the audit committee?

Two-thirds (A) Signup and view all the answers

Who should not be members of the audit committee?

Corporate officers (D) Signup and view all the answers

What is a requirement for the nominating committee?

To set up a formal, permanent procedure on how to select directors (C) Signup and view all the answers

What is a mandatory requirement in the annual report?

Disclosure of social and environmental impact (B) Signup and view all the answers

What is a characteristic of businesses in Italy?

The largest stake in all companies is held by holdings (D) Signup and view all the answers

What is driving convergence in company law and securities regulations?

Globalization of investor markets (C) Signup and view all the answers