d. a silver handshake. for example, one consultant observed the following: Pletzer, Nikolova, Kedzior, and Voelpel (2015), The Subtle Levers That Influence Affirmative Action, How Reshoring Will Restore the Drug Supply Chain, Climate Crisis: Who Is Responsible for the Planet? c. reduce the risk of total firm failure, reduce their total portfolio risk Historically, ____ have been at the center of the German corporate governance structure. The decisions made by top-level managers are typically complex and nonroutine. The chapter Opening Case indicates that many CEOs earn more than ____times the amount re-ceived by their firm's lowest-paid employee. b. the total revenue of the firm. c. increased shareholder participation in decision making. d. a variety of compensation plans for executives of foreign subsidiaries. She shared, I can understand what it means to be a token person. Many boards are also broadening the range of professional backgrounds considered for board member positions, allowing them to attract more socially diverse directors who bring, as one interviewee referred to it, diversity of thought. This is easier to achieve when boards avoid filling open seats with people already in their personal and professionals networks. b. This may lead to all of the following EXCEPT c. Banks' influence over corporations is increas-ing. c. having the stock option plan designed by insiders on the board of directors who are familiar with day-to-day operations of the firm. 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. q:q:q: The air co nditioner is working. An agency relationship exists when one party delegates c. often performing above their industry averages. d.encumbered. Some boards are more hierarchical in their communication orientation while others are more egalitarian. As ownership of the corporation is diffused, shareholders' ability to monitor managerial deci-sions A majority of the directors are concerned that while Mr. Leagreet has been responsible for the firm's earning above-average returns, that he has been displaying a tendency toward personal extravagance at the firm's expense. They also raised concerns with what they referred to as checking the box initiatives and tokenism for the sake of board diversity. Research suggests that boards of directors perform better if: a. outside directors own significant equity in the organization. b. increasing the concentration of ownership of large U.S. firms. 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. A business journal from the Wharton School of the University of Pennsylvania. But research conducted by consulting firms and financial institutions is not as rigorous as peer-reviewed academic research. c. lower c. opportunity The two meta-analyses reached very similar conclusions, despite the differences in the underlying studies (140 studies vs. 20, etc.). Evidence that board diversity benefits firms, however, has been mixed. c. defense tactics are typically ineffective in deterring the takeover. a. the strategic decision making process. While new to the U.S., mandates to increase gender diversity on corporate boards are common elsewhere. b. a weak board of directors. b. greater managerial autonomy. b. financial responsibility to employees. James Abercrombie has a thriving consulting firm specializing in training boards of directors in decision-making skills. People believed that the company that appointed Marilyn cared more about improving the social performance of the firm and less about maximizing shareholder value, compared to the company that appointed Jack. We found no difference in the perceived competence of Marilyn and Jack, which was not surprising given their identical bios. d. The firing by President Obama of the CEO of General Motors because the board had failed to act in previous years. a. the number of stockholders and the parties they represent. "Institutional owners are: "Given the demands for greater accountability and improved performance, which of the following is NOT a voluntary change many boards of directors have initiated? There have been many rigorous, peer-reviewed studies of board gender diversity. b. increase the price of the firm's stock, increase the dividends paid out from free cash flows Research suggests that boards of directors perform betterif a. the CEO is also the chairperson of the board ofdirectors. Monitoring by shareholders is usually accomplished through a. increased diversification of Sierra Infusion. c. an increased number of IPOs (initial public offerings) are expected. Annual U.S. beer production data is given below. Differing views between board members act as a governance mechanism, preventing radical decisions from being made. d.a silver handshake. More Evidence That Company Diversity Leads To Better Profits - Forbes b. decreases. Even if the women named to corporate boards are different from the men on these boards, they may not speak up in board conversations and they may lack the influence to change the boards decisions. d.tying the compensation of CEOs to measur-able financial criteria. b. strengthens the governance processes of the firm. b. ensure that the interests of top-level managers are aligned with the interests of shareholders. Both the Pelzer purchase and the Alvarez sale were in transit at year-end. 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. c. Borders' decision to increase the size of its board a. ATP has been the initiator of several hostile takeovers in the last two years. Rigorous, peer-reviewed studies suggest that companies do not perform better when they have women on the board. a. negatively related to: c. managers' risk of job loss, loss of compensation, and/or loss of reputation. d. the board of directors. Still, the relationship between gender diversity and accounting returns was tiny. b. typically under-performing their industry. Research: When Gender Diversity Makes Firms More Productive Some major Japanese firms are bringing in more outsiders onto their boards of directors. There is overwhelming evidence to support the value of having more women in senior leadership positions. "In Japan, the principal source of the active monitoring of large companies comes from: All rights reserved. International Food Services (IFS) has a contract with the Marines to supply meals for its troops in Iraq and other foreign assignments. c. executive compensation systems. Here, I dig into the findings of rigorous, peer-reviewed studies of the relationship between board gender diversity and company performance. d. This type of plan is likely to cause the CEO to underinvest in R&D in order to boost CamCell's long-term profitability. Which of the following statements is most likely to be TRUE? But firms expecting a financial performance boost simply by increasing female board representation may end up disappointed. Again, its important to remember that a significant correlational relationship does not prove causality. a. a. high executive turnover. c. 50 d. The gap in compensation between CEOs in public and private companies is in-creasing. A recent survey of more than 770 directors from public and private companies across industries around the world and from nonprofit organizations suggests that some are responding more energetically than others. d.companies in mature, slow-cycle industries. c. reduce the risk of total firm failure, reduce their total portfolio risk The Vorstand (management board) of a German corporation makes decisions about strategy and management. "Amos Ball, Inc., is a printing company in Iowa that has been family owned and managed for three generations. "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. When they argue, they do it in a pretty much respectful way. They prefer to start from a position of trust. We merged our data on board composition and firm financials with social performance ratings from KLD STATS, an index for socially responsible investing. d. banks. b. The fact that a hostile takeover has occurred is proof that the firm was un-der-performing. d.Mr. b. returned to them as dividends. b. the board includes employees as voting members.c. While its possible that the addition of women to the board causes an increase in CSR, existing research cannot prove it. b. a. safer strategies with greater diversification for the firm. d. requiring that outside directors be truly objective by having no ownership interest in the firm. Stephanie Creary is an assistant professor of management and organizational behavior scholar at the Wharton School of the University of Pennsylvania. We find that companies that appoint women to the board see a decline in their market value for two years following the appointment (after which we no longer see any effect). Diversity, Inclusion, and Belonging Course. b. the manager frequently invests in the acquired firm which allows him or her exten-sive profits, the manager can frequently buy excess assets divested by the acquired firm Which of the following reasons would NOT explain the difficulty of determining appropriate executive compensation? "One means that is considered to improve the effectiveness of outside directors is: Companies in our research with a digitally savvy board had 38 percent higher revenue . b. firms earning above-average returns The apartment is hot or the air conditioner is not working , if and only if the temperature is 9090^{\circ}90. the CEO is also the chairperson of the board of directors.b. c. German firms will not be interested in Mr. Abercrombie's services because the German system of decision-making is based on authority and few conflicts emerge. c. The CEO/Chairperson of the Board has been suspected of opportunistic behavior. Working in a group, discuss how the New Therapy Company can meet the deadline and still ensure a high quality of care. a. Boards Need To Up Their Game In Terms Of Cognitive Diversity - Forbes d.CEOs and other top executives tend to hold their jobs for five years or less, meaning they are not employed by the firm for the appropriate period of time. In a normal distribution, data values farther from the mean are d.reflected in the price of the stock. b. control b. institutional shareholders d. ownership of a company to a second party. b. the addition of outside directors to the board. "The New York Stock Exchange requires that the audit committee be: "A virtually exclusive reliance on financial controls may occur when outsider-dominated boards exist. 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 governance mechanism most closely connected with deterring unethical behaviors by hold-ing top management accountable for the corporate culture is a. a golden parachute. Despite popular press accounts that suggest that teams high in gender diversity outperform those composed only of men or only of women, rigorous research does not support this conclusion. Klein is also the vice dean of the Wharton Social Impact Initiative. b. may not have a direct effect on firm performance. a. decision making responsibility to a second party. ____ is an important influence in Japanese corporate governance structures. Complete the following: In small firms, managers often own a ____ percentage of the firm, which means there is ____ separation between ownership and managerial control. 1 The survey revealed dramatic differences in how directors . Based on these findings, they worked with the 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. The directors are all outsiders, experienced, and run their own successful firms. At a meeting over dinner, the top management team agrees to go to the board of directors with a proposal for "If the market for corporate control were efficient as a governance device, then only ____ would be targets for takeovers. a. bonuses. 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. Its worth noting that even if the meta-analyses revealed a stronger relationship between board gender diversity and firm performance, we couldnt conclude that board gender diversity causes firm performance. b. d. incentive. b. a standstill agreement. c. excessive management compensation. a. greenmail. b. stock brokerage companies. This may lead to all EXCEPT: c. Institutional investors disapprove of long-term executive incentive plans and they may sell their blocks of stock in CamCell. c. pressure the board of directors to reprice their stock options. a. used to diversify the firm. a. ownership concentration. c. incentives for One interviewee commented on how having social diversity wasnt good enough if all board members were former CEOs or CFOs. b. higher b. headed by outside directors. Board diversity matters but concentrating on only one form of diversity isnt enough. "As ownership of the corporation is diffused, shareholders' ability to monitor managerial decisions: The gap between CEO pay and the pay of other top executives at Chromatic was significantly larger than at Pixilair. In other words, investors seem to be penalizing, rather than rewarding, companies that strive to be more inclusive. a. Satyam's stock price suffered a significant decline. The fact that a hostile takeover has occurred is proof that the firm was under-performing. "Product diversification provides two benefits to managers that do not accrue to shareholders: ____ and ____. a. usually on the verge of bankruptcy. a. the CEO is also the chairperson of the board of directors. c. require Mr. Leagreet to personally certify the firm's financial reports. The average correlation is .15. b. stock brokerage companies. d.greater concentration on Sierra's core industry. c. the manager's supervisory needs are lowered, the manager is allowed greater time to oversee a wider range of activities Activist shareholders are not necessarily more convinced about diversity being a source of value creation. 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. The women named to corporate boards may not in fact differ very much in their values, experiences, and knowledge from the men.. "Japanese keiretsu are: d.reduce their employment risk, increase the company's value, Agency costs reflect all of the following EXCEPT ____ costs. b. requiring that outside directors be former executives of the firm. The women named to corporate boards may not in fact differ very much in their values, experiences, and knowledge from the men who already serve on these boards.