b. banks and other lending institutions that have provided major financing to the firm. Research suggests that boards of directors perform better if: Mr. Abercrombie has had striking success in reducing conflict and hostil-ity among directors and allowing boards to develop more cohesiveness. c. related Compensation of CEOs in both private and public companies is being tied more closely to observable performance goals. If investors are indeed interpreting female appointments as a sign that the company is less committed to maximizing returns to their shareholders, the effect of increases in board diversity should be larger for those companies that demonstrate commitment to social goals in other ways. b. the manager frequently invests in the acquired firm which allows them extensive profits, the manager can frequently buy excess assets divested by the acquired firm c. The CEO/Chairperson of the board has been suspected of opportunistic behavior. Another recent study by Jonson et al. After all, both male and female board members are likely to be selected for their professional accomplishments, experience, and competence. When individuals are minorities, tokens, or outliers in a group, they often self-censor, holding back from expressing beliefs and opinions that run counter to the beliefs and opinions of the majority of the group. For a board comprised of lawyers, this might mean adding an engineer and a sociologist in the mix. d.the head of contract services for the Marines, Chapter 11: Organizational Structure and Cont, John David Jackson, Patricia Meglich, Robert Mathis, Sean Valentine, Information Technology Project Management: Providing Measurable Organizational Value, Operations Management: Sustainability and Supply Chain Management, canvas quiz : Blood vessels and circulation. b. internal controls have failed. "Product diversification provides two benefits to managers that do not accrue to shareholders: ____ and ____. a. less common than data values close to the mean. b. internal auditing scrutiny has improved and there is greater trust in financial report-ing. d.outsidedirectors ownsignificantequityintheorganization. Which of the following statements is most likely to be TRUE? d.over-valued firms. a. lead independent b. control d.riskier strategies with greater diversification for the firm. Institutional Investors on Boards: Does Their Behavior Influence c. strategy implementation actions to functional managers. More Evidence That Company Diversity Leads To Better Profits - Forbes d. is eliminated. a. small; small d. The CEO and top executives should not consider their jobs secure. d.defense tactics make the costs of a takeover lower. Generally, a board member who is a source of information about a firm's day-to-day activities is classified as a(an) ____ director. Does this mean that we should not promote women to corporate boards? c. executive compensation systems. One shared: I have some influence, and Im trying to exert my influence.. Research suggests that boards of directors perform betterif a. the CEO is also the chairperson of the board ofdirectors. c. used to reduce corporate debt. Hostile takeover attempts are so common that they do not reflect negatively on the firm's performance. d. Section 404 creates excessive costs for firms. Which of the following statements is true? CamCell is presently searching for a new CEO. a. high executive turnover. Research has found little to no evidence supporting the idea that companies with female board directors perform better than companies run by all-male boards. d. Corporate governance is best achieved with a board of directors with strong ties to management. Ambrose Bierce, the CEO of DictionAry, has been paid a lump sum amounting to three years' salary because DictionAry has been bought in a hostile takeover by its main competitor. New Report: Companies With Diverse Boards Out Performed Their Peers Firms should be selecting the very best directors from the largest talent pool possible, and excluding women from that pool to avoid market penalties would be counterproductive. b. long-term firm performance is more easily manipulated by the board of directors through financial and accounting methods than are shorter-term measures of firm performance. And, finally, even if the addition of women to corporate boards does improve cognitive variety and decision making, companies may only see benefits to their accounting performance (their sales, profits, return on assets, for example) not their market returns. Ownership concentration is determined by both c. Research shows that once a hostile takeover has been defeated, the firm is safe from other hostile takeover attempts for many years. a. safer strategies with greater diversification for the firm. "The interests of multinational corporations' shareholders may be best served when there is: b. the board of directors of IFS Companies in our research with a digitally savvy board had 38 percent higher revenue . "The board of directors of CyberScope, Inc., is designing a stock option plan for its CEO that will motivate the CEO to increase the market value of the firm. One interviewee commented on how having social diversity wasnt good enough if all board members were former CEOs or CFOs. Historically, ____ have been at the center of the German corporate governance structure. d. The CEO was a recipient of the Golden Peacock Award for Corporate Governance. c. the firm's top managers. Conventional wisdom says gender diversity in the corporate boardroom improves company performance. "Managers in the U.S. receive ____ compensation than managers in the rest of the world. c. elevation of foreign executive compensation to U.S. levels. We merged our data on board composition and firm financials with social performance ratings from KLD STATS, an index for socially responsible investing. In contrast to managers' desires, shareholders usually prefer that free cash flows be d. penalties for inadequate firm performance. The New York Stock Exchange requires that the audit committee be d. a system of cross-shareholding among firms. The average correlation is .15. On analysis of the literature, we found a systematic review of non-exhaustive literature on corporate governance (ownership structure and board of directors) and firm innovation (Gonzales-Bustos & Hernndez-Lara, 2016) as well as a theoretical review on the topic (Asensio-Lpez et al., 2019).However, as far as we know, there are no prior studies on the specific association between the board . If so, board gender diversity may be positively related to accounting returns, but not market returns. Knowledge at Wharton is an affiliate of the Wharton School of the University of Pennsylvania. "International Food Services (IFS) has a contract with the Marines to supply meals for it troops in Iraq and other foreign assignments. a. earnings potential for: For example, Norway, Spain, France, and Iceland all have laws requiring that women comprise at least 40% of boards at publicly listed companies. Many boards continue to recruit directors from the pool of current or former CEO/CFOs, and changing demographics within these pools do present opportunities to recruit more diverse members. c. Borders' decision to increase the size of its board d.independence of the committees on the firm's Board of Directors. a. increased diversification of Sierra Infusion. d.The firm is traded on the New York Stock Exchange and must change its corporate governance to comply with the NYSE's new rules. The governance mechanism most closely connected with deterring unethical behaviors by hold-ing top management accountable for the corporate culture is There was, however, a difference in the perceived goals of the company. Despite the intuitive appeal of the argument that gender diversity on the board improves company performance, researchRead More a. going to actively defend their firm from takeover attempts. b. selecting new CEOs. "Managerial employment risk is the: c. Electing an lead director. An immense investigative effort has been devoted to these questions: over 140 studies in the past several decades, conducted in dozens of countries, and published in journals from many different disciplines and theoretical traditions. b. CamCell may have to over-compensate its CEO in order to offset the personal risk a CEO would undertake under this plan. As a means of increasing profits, IFS has used substandard ingredients in these meals and has consistently lied about this practice during quality investigations by the Marines. a. risk that managers will behave opportunistically. Researchers have also studied the relationship between board diversity and various board decisions and practices such as acquisitions, board monitoring and dividend payouts (Ararat, Aksu, Cetin, 2015; Chen, Crossland and Huang, 2016; Chen, Leung, & Goergen, 2017). Byron and Post (2016) meta-analyzed the results of 87 studies and found that board gender diversity is weakly but significantly positively correlated with CSR. In order to limit Mr. Leagreet's power, the board of directors plans to Companies with a Digitally Savvy Board Perform Better c. used to reduce corporate debt. a. ownership concentration. One suggested explanation for this puzzling finding is that the stock market is biased and believes that women are not as competent when making business decisions. All of the following are consequences of the Sarbanes-Oxley Act EXCEPT d.prevented by the Sarbanes-Oxley Act from owning more than 50% of the stock of any one firm. We then gave the participants a list of 10 corporate goals and asked them how much they thought the company cared about each of them. The number of women among them? Innovation c. liable for any illegal actions by the top management team. "Research suggests that the activism of institutional investors such as TIAA-CREF and CalPERS: b. government auditors. c. Employees, union members, and shareholders appoint members to the Aufsichsrat (the supervisory tier of the board). The benefits of having a socially and professionally diverse board cannot be realized without an egalitarian board culture. This may lead to all EXCEPT: Activist shareholders are not necessarily more convinced about diversity being a source of value creation. "Several members of the board of directors of American Textile Products (ATP) have proposed creating the position of lead director. "The ownership of major blocks of stock by institutional investors have resulted in all of the following EXCEPT: a. the CEO is also the chairperson of the board of directors. d. has weakened the effect of other governance mechanisms. b. c. opportunity 5. mechanics and neural control of contraction, Information Technology Project Management: Providing Measurable Organizational Value, John David Jackson, Patricia Meglich, Robert Mathis, Sean Valentine. c. salary. y=2x+8;y=12;1x2. d. the proportion of insiders on the board of directors. b. "The top management team at Sierra Infusion is concerned about the declining performance of firms in their industry. a. available to comment to external analysts. a. some foreign firms have delisted on U.S. stock exchanges. d.the difference in risk propensity between owners and managers. c. 50 b. higher c. lower levels of product diversification. ANS: D PTS: 1 DIF: Medium d. c. managers' risk of job loss, loss of compensation, and/or loss of reputation. Which of the following is most likely to be TRUE? b. accounting firms are forbidden from providing both auditing and consulting services to clients. a. firms with unethical top executives A major conflict of interest between top executives and owners, is that top executives wish to diversify the firm in order to ____, while owners wish to diversify the firm to ____. d. the opportunity for higher compensation through firm growth, a reduction in mana-gerial employment risk. A recent study, of board composition and financial data on 1,644 public companies in the United States between 1998 and 2011, finds that companies that appoint women to the board are no more profitable than those that do not. One explained that their collegial board culture resulted from information being shared openly, with little back channeling or meeting outside of the formal meeting to raise concerns. Consequently, the board has decided on an incentive plan that involves payout based on the firm's performance five years in the future. 1. c. the laxity of institutional investors. "A virtually exclusive reliance on financial controls may occur when outsider-dominated boards exist. While new to the U.S., mandates to increase gender diversity on corporate boards are common elsewhere. Consequently, the board has decided on an incentive plan that involves payout based on the firm's performance five years in the future. Research suggests that boards of directors perform - Course Hero the board is homogenous in composition. One interviewee revealed how she turned down a board position because she felt that the interviewing board members were not able to comment on her expertise only their desire to have gender diversity on the board. Which of the following statements is most likely to be TRUE? That gives you an opening to say, Oh, okay, we need to look for somebody who understands manufacturing abroad. So, as long as we are going to go look for somebody, lets use it as an opportunity to build some diversity.. b. ensure that the interests of top-level managers are aligned with the interests of shareholders. b. small; large c. defense tactics vary in their effectiveness as a defense to takeovers. b. a poison pill. The slow progress on gender diversity has frustrated policymakers, industry groups, and institutional investors, many of whom have publicly advocated for inclusion of women and minorities among the top ranks of management. d. Individualism. The separation between firm ownership and management creates a(n) ____ relationship. Other things being equal, market analysts may, consciously or unconsciously, regard all-male boards as more competent than boards that are more gender-diverse. "If the market for corporate control were efficient as a governance device, then only ____ would be targets for takeovers. Why or why not? In contrast to hierarchical boards, more egalitarian boards have a more collegial board culture. Some major Japanese firms are bringing in more outsiders onto their boards of directors. d. requiring that outside directors be truly objective by having no ownership interest in the firm. The CEO and the top executives successfully fended off the takeover and are concentrating on strategies to improve the performance of the firm. Research suggests that boards of directors perform better if I think we all recognize the value and we all respect the diversity and the importance of diversity. a. boards of directors. Combined, the board members held seats on 47 corporate boards in the U.S. across a variety of industries. The average correlation between CEO gender and long-term financial performance is .007. Managers may decide to invest ____ in products that are not associated with the firm's current lines of business to increase the firm's level of diversification and decrease their employment risk. b. riskier strategies with more focused diversification for the firm. a. management consultants. If these dynamics occur within corporate boards, boards may not take full advantage of their own cognitive variety. We also asked them to evaluate the competence of the new board member. d. encumbered. But our research suggests that shifting the diversity discourse away from gender to other dimensions of expertise and experience might, in fact, help women and other underrepresented groups for example, instead of saying we have appointed a female director the focus should be we have appointed an expert on China. With less emphasis on gender, female appointments might one day no longer be perceived as checking a social performance box, and signal nothing about firm preferences other than its commitment to hiring the best people for the job. d. risk managers will not find a new top management position if they should be dis-missed. One board member discussed her experience on a board: I do feel Im listened to The CEO makes a big difference in terms of the openness., Similarly, another shared how a different CEO made it easier for board members to access the management team: It starts, again, with the CEO not playing the hierarchical role and saying, You cant talk to one of my VPs unless you come through meSo we had access to the next level of management. c. large; small Research following the resource dependence theory generally expects boards to have a positive effect on firm performance by engaging in the resource provision function, as doing so the firms to benefit from directors' human capital and social capital in value creation ( Haynes and Hillman, 2010; Jiang et al., 2020 ). ____ is an important influence in Japanese corporate governance structures. The results of these two meta-analyses, summarizing numerous rigorous, original peer-reviewed studies, suggest that the relationship between board gender diversity and company performance is either non-exist (effectively zero) or very weakly positive. Consequently, the board is Which of the following statements is most likely to be TRUE? a. d.greater concentration on Sierra's core industry. A business journal from the Wharton School of the University of Pennsylvania. b. large institutional investors control large blocks of stock. d. 75. b. d. The firm is traded on the New York Stock Exchange and must change its corporate governance to comply with the NYSE's new rules. Based on these findings, we worked with Mike Fucci, Chairman of the Board at Deloitte, to develop recommendations for how board chairs and directors can create more egalitarian board cultures and improve their governance. a. setting the option strike price substantially higher than the current stock price. a. d.a silver handshake. b. likely to gain financially if their employing firm is taken over by another. b. organizational size. a. defense tactics are usually beneficial for the executives of the target firm. Legislation, codes of conduct, and guidelines have been developed to improve corporate governance. a. c. the board is homogenous in composition. Researchers studied 1,644 public companies. Corporate Directors' Implicit Theories of the Roles and Duties of Boards As an illustration, I show that two current measures of board of director performance, board meeting activity and director attendance, suggest that the boards of Asian firms do not compare favorably to the boards of firms from developed markets. d. over-valued firms. Abercrombie should find significant need for his services in companies in transitional economies. a. a uniform compensation plan for all corporate executives, U.S. and foreign alike. b. stock brokerage companies. They increase the boards cognitive variety. The greater a boards cognitive variety, the theory goes, the more options it is likely to consider and the more deeply it is likely to debate those options. Rigorous, academic studies of CEO gender and company performance tell much the same story as rigorous, academic studies of board gender diversity and company performance do. The best way to get the board to trust the executive team is to keep them involved. a. the firm is overpriced in the market. Yet, the answers have not been clear or consistent. HBR Learnings online leadership training helps you hone your skills with courses like Diversity, Inclusion, and Belonging. Some boards are more hierarchical in their communication orientation while others are more egalitarian. Many of our interviewees suggested that their boards had made progress on gender diversity but not on other forms of social diversity such as race, nationality, and age. d.incentive. c. A number of factors intervene between top-level management decisions and firm performance. The CEO and the top executives successfully fended off the takeover and are concentrating on strategies to improve the performance of the firm. Research Review: Does Gender Diversity on Boards Really Boost Company In McKinsey's previous studyconducted with 2014 numbersthat increase had been 35%. Complete the following: In small firms, managers often own a ____ percentage of the firm, which means there is ____ separation between ownership and managerial control. But academic research says otherwise. "The board of directors of Acme Brands is discussing the design of a very generous stock option plan for its top executives. d. a variety of compensation plans for executives of foreign subsidiaries. 5 d.75. Couple times it hasnt been but someone will just say, Hey thats not very respectful, you know the way you just said that., Several interviewees told us that boards that value open communication are more likely to engage in conversations about diversity even those that believe they still have a long way to go. Ambrose received: Here, I dig into the findings of rigorous, peer-reviewed studies of the relationship between board gender diversity and company performance. The Vorstand is elected by the firm's employees. All of the following are unintended consequences of the Sarbanes-Oxley Act EXCEPT: a. significant pay reductions for many corporate CEOs b. a weak board of directors. Managers in the U.S. receive ____ compensation than managers in the rest of the world. Cultivate trust and encourage the board to be involved in strategy. b. increased diversification of the firm. The ownership of major blocks of stock by institutional investors have resulted in all of the fol-lowing EXCEPT The market for corporate control may not be as efficient as previously thought as recent findings suggest that those firms targeted for takeover by active corporate raiders are The Chinese governance system has been moving towards the Western model in recent years. "The governance mechanism most closely connected with deterring unethical behaviors by holding top management accountable for the corporate culture is: d.reflected in the price of the stock. It is not because companies perform worse after they appoint female directors. b. c. the firm's tax issues. It signals an end, or at least the beginning of an end, to gender exclusivity in firm leadership. See answer Advertisement sandlee09 Answer: c. Explanation: c. large block shareholders such as mutual funds and pension funds. b. risks borne by The team members are becoming concerned about the security of their jobs at Sierra Infusion. This suggests that gender diversity on the board explains about two-tenths of 1% of the variance in company performance. Members of these boards believe that both their expertise and willingness to learn is recognized and incorporated into the boards work. The CEO's behavior may be indication of: Many of our interviewees suggested that their boards had made progress on gender diversity but not on other forms of social diversity such as race, nationality, and age. The apartment is hot or the air conditioner is not working , if and only if the temperature is 9090^{\circ}90. a. bonuses. The market for corporate control has collapsed with the economic crises in Japan. Evidence that board diversity benefits firms, however, has been mixed. b. large institutional investors control large blocks of stock. d. frozen assets, Product diversification provides two benefits to managers that do not accrue to shareholders: ____ and ____. a. going to actively defend their firm from takeover attempts. b. enforcement d.has weakened the effect of other governance mechanisms. Similarly, the relationship of top management team (TMT) gender diversity and company performance is statistically significant but very small. A growing body of research including studies by McKinsey & Company has proven that companies with more women in senior executive and board roles have advantages over those that dont.. the board is homogenous in composition. a. greenmail. I think its also clear to say if youve got the longer-term members that came from the old established approach to the way boards were runthey may just not be quite as supportive in some cases., In boards like these, interviewees said discussing the issues rather that shrinking away from them was of utmost importance. b. company unions, which are a type of governance system. b. government auditors. Women should be appointed to boards for reasons of gender equality, but not because gender diversity on boards leads to improvements in company performance. "Institutional owners are: This seems unlikely. c. A number of factors intervene between top-level management decisions and firm performance (e.g., unpredictable economic, social, or legal changes). "The New York Stock Exchange requires that the audit committee be: c. uncontrollable events may affect the long-term performance of the firm. The CEO tended to dominate the conversation. c. equally as common as data values close to the mean. Research suggests that boards of directors perform better if a. the CEO is also the chairperson of the board of directors. c. the banks owing the largest shares of stock in the firm. It is worth noting that gender diversity in other kinds of work teams is not significantly positively related to performance, either. a. defense tactics are usually beneficial for the executives of the target firm. a. reasonably compensating a CEO. b. the board includes employees as voting members. a. setting the option strike price substantially higher than the current stock price. "Japanese keiretsu are: a. Mr. Abercrombie will have a large market in Japan because the culture highly val-ues consensus decision making. They are more a function of general market conditions. c. gives the Board of Directors more power. It is not uncommon for a firm to explicitly mention gender when they announce appointments of new board members but of course this only happens if the new board member is a woman. A 2015 meta-analysis of 140 research studies of the relationship between female board representation and performance found a positive relationship with accounting returns, but no significant relationship with market performance. b. A 2015 meta-analysis of 140 research studies of the relationship between female board representation and performance found a positive relationship with accounting returns, but no significant relationship with market performance. We interviewed 19 board directors (15 women and four men) to learn whether and how corporate boards were benefiting from diversity. d. reflected in the price of the stock. a. the firm's free cash flow. c. Membership of U.S. boards of directors is less directly influenced by the company's employees than is the membership of German Aufsichsrat. It might be unconscious bias. Depending on which meta-analysis you read, board gender diversity either has a very weak relationship with board performance or no relationship at all. The CEO was involved in overstating company revenues and profits. b. increased diversification of the firm. a. making CEOs more accountable for their performance. But while many prescriptions for improving corporate governance focus on the structure of. Research suggests that boards of directors perform better if a. the CEO is also the chairperson of the board of directors.
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