Introduction to Corporate Governance
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Questions and Answers

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?

    <p>More frequent meetings, including meetings of independent members only</p> Signup and view all the answers

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

    <p>To provide efficient control</p> Signup and view all the answers

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

    <p>To establish a more performance-based remuneration system</p> Signup and view all the answers

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

    <p>To reduce the risk of default for the bank</p> Signup and view all the answers

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

    <p>To bring in external expertise and attract investors</p> Signup and view all the answers

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

    <p>All non-executive director board</p> Signup and view all the answers

    What is a characteristic of a unitary board?

    <p>Existence of a single board comprising executive and non-executive directors</p> Signup and view all the answers

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

    <p>To supervise and monitor the executive directors</p> Signup and view all the answers

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

    <p>Unitary board</p> Signup and view all the answers

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

    <p>It increases the risk of a hostile takeover</p> Signup and view all the answers

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

    <p>To prevent a hostile takeover by buying shares from potential investors</p> 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?

    <p>It provides a means of control for management performance</p> Signup and view all the answers

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

    <p>To prevent a hostile takeover by requiring a supermajority</p> Signup and view all the answers

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

    <p>Poor management performance</p> Signup and view all the answers

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

    <p>It leads to better management performance</p> Signup and view all the answers

    What is the primary objective of corporate governance?

    <p>To protect the interests of shareholders and other stakeholders</p> Signup and view all the answers

    What are the external dimensions of corporate governance?

    <p>Laws and regulations, values and norms</p> Signup and view all the answers

    What is the role of internal actors in corporate governance?

    <p>To direct and control the corporation</p> Signup and view all the answers

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

    <p>To ensure that an appropriate system of control works within a company</p> Signup and view all the answers

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

    <p>Corporate governance provides the structure through which the objectives of a company are set and monitored</p> Signup and view all the answers

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

    <p>Concerned with the relationship between the board of directors, the management, the shareholders and other stakeholders</p> Signup and view all the answers

    What proportion of independent directors should comprise the audit committee?

    <p>Two-thirds</p> Signup and view all the answers

    Who should not be members of the audit committee?

    <p>Corporate officers</p> Signup and view all the answers

    What is a requirement for the nominating committee?

    <p>To set up a formal, permanent procedure on how to select directors</p> Signup and view all the answers

    What is a mandatory requirement in the annual report?

    <p>Disclosure of social and environmental impact</p> Signup and view all the answers

    What is a characteristic of businesses in Italy?

    <p>The largest stake in all companies is held by holdings</p> Signup and view all the answers

    What is driving convergence in company law and securities regulations?

    <p>Globalization of investor markets</p> Signup and view all the answers

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