Professional Documents
Culture Documents
Ch07 TB Rankin
Ch07 TB Rankin
to accompany
Prepared by
Matt Tilling
1. Which of the following problems has contributed to the growth in corporate governance
over the past decades?
Correct answer: d
Learning Objective 7.1 ~ Explain the interest in corporate governance.
Correct answer: c
Learning Objective 7.1 ~ Explain the interest in corporate governance.
Correct answer: c
Learning Objective 7.2 ~ Explain what corporate governance is and why good corporate
governance systems are needed.
4. According to the Anglo-Saxon model whose interest should be the focus of corporate
governance?
a. Employees
*b. Shareholders
c. Community
d. Environment
Correct answer: b
Learning Objective 7.2 ~ Explain what corporate governance is and why good corporate
governance systems are needed.
5. Which of these costs is NOT associated with an agency relationship between managers
and shareholders?
a. Monitoring Cost
*b. Taxation Loss
c. Bonding Cost
d. Residual Loss
Correct answer: b
Learning Objective 7.3 ~ Discuss the relationship between positive accounting theory and
corporate governance.
a. Risk aversion
b. Dividend retention
c. Horizon problem
*d. All of the above
Correct answer: d
Learning Objective 7.3 ~ Discuss the relationship between positive accounting theory and
corporate governance.
Correct answer: d
Learning Objective 7.4 ~ Discuss the key areas involved in corporate governance.
8. Which of the following is NOT one of the ASXs Principles of Corporate Governance?
Correct answer: a
Learning Objective 7.4 ~ Discuss the key areas involved in corporate governance.
Correct answer: c
Learning Objective 7.4 ~ Discuss the key areas involved in corporate governance.
10. To ensure shareholders are sufficiently informed good governance practices include:
Correct answer: d
Learning Objective 7.4 ~ Discuss the key areas involved in corporate governance.
Correct answer: b
Learning Objective 7.5 ~ Explain and evaluate the alternative approaches to corporate
governance.
Correct answer: a
Learning Objective 7.5 ~ Explain and evaluate the alternative approaches to corporate
governance.
13. Which of the following is NOT a significant influence on actual corporate governance
practice?
Correct answer: d
Learning Objective 7.5 ~ Explain and evaluate the alternative approaches to corporate
governance.
14. Which of the following were examples of risk management deficiencies that lead to the
GFC:
i. risk being monitored at the individual level rather than the entity level.
ii. information about risks not reaching the board.
iii. the organisational culture of pursuing growth in profits
iv. remuneration packages for high risk activities
v. alerting shareholders to a potential investment with a high return
a. i, ii, iii, v
b. ii, iii, iv, v
*c. i, ii, iii, iv
d. i, ii., iii., iv., v.
Correct answer: c
Learning Objective 7.6 ~ Discuss recent developments and issues in corporate governance.
15. What element of executive remuneration has been argued to have contributed to the
global financial crisis?
a. Share options
*b. Bonuses on the basis of short-term profits
c. Bonuses on non-financial key performance indicators
d. High fixed salary components
Correct answer: b
Learning Objective 7.6 ~ Discuss recent developments and issues in corporate governance.
16. The Dodd-Frank Wall Street Reform and Consumer Protection act includes provisions
that require:
Correct answer: d
Learning Objective 7.6 ~ Discuss recent developments and issues in corporate governance.
17. What is one of the ways that accounting is used to direct and control the manager of a
corporation?
Correct answer: a
Learning Objective 7.7 ~ Explain the role and impact of accounting in and on corporate
governance.
a. i, ii
*b. iii, iv
c. i, ii, iii
d. iv, iii, ii, i
Correct answer: b
Learning Objective 7.7 ~ Explain the role and impact of accounting in and on corporate
governance.
19. When it comes to corporate governance many commentators have argued the most
important factor is:
Correct answer: c
Learning Objective 7.8 ~ Discuss and analyse the role of ethics in corporate governance.
Correct answer: d
Learning Objective 7.9 ~ Discuss international perspectives and developments in corporate
governance.