P R A V I N M A N D O R A G R O U P T U T I O N S

CORPORATE GOVERNANCE

1. All of the following are core attributes of an effective corporate governance system except:
a) fairness and accuracy in identifying inherent conflicts of interest.
b) clearly defined governance responsibilities for managers and directors.
c) identifiable and measurable accountabilities for the performance of responsibilities
d) definition of shareholders and other core stakeholders rights.

2. The objectives of an effective system of corporate governance include all of the following except:
a) ensure that the assets of the company are used efficiently and productively
b) eliminate or mitigate conflicts of interest among stakeholders
c) ensure that the assets of the company are used in the best interests of the investors and other
stakeholders
d) ensure complete transparency in disclosures regarding operations, performance, risk, and
financial position.

3. At a recent conference, the following statements were made about corporate governance.
Countries tend to have similar corporate governance practices.
According to Shareholder theory, the most important responsibility of a companys
management is its customers.
There is a current trend towards convergence of shareholder and stakeholder theories.
Corporate governance is the system of internal controls and procedures by which individual
companies are managed.
Which of the statements regarding corporate governance is/are most accurate?
A. I and II only
B. II only
C. III and IV only

4. Which of the following best defines the concept of corporate governance;

A. A system for monitoring managers' activities, rewarding performance, and disciplining
misbehavior
B. Identifiable and measurable accountabilities for all stakeholders
C. Corporate values and governance structures that ensure business is conducted in an ethical,
competent, fair, and professional manner
D. A system of principles, policies, and procedures used to manage and control the activities of a
corporation so as to overcome conflicts of interest inherent in the corporate form

5. Which statement regarding corporate governance is most accurate?

A Most countries have similar corporate governance regulations.
B A single definition of corporate governance is widely accepted in practice.
C Both shareholder theory and stakeholder theory consider the needs of a company's
shareholders.

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M.B.A (FINANCE) , I.C.W.A (INTER)
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CORPORATE GOVERNANCE

6. Which stakeholders would most likely realize the greatest benefit from a significant
increase in the market value of the company?
A Creditors
B Customers
C Shareholders

7. A controlling shareholder of XYZ Company owns 55% of XYZs shares, and

the remaining shares are spread among a large group of shareholders. In this
situation, conflicts of interest are most likely to arise between:
A shareholders and regulators.
B the controlling shareholder and managers.
C the controlling shareholder and minority shareholders.

8. The component of stakeholder management in which a corporation has the

most control is:
A legal infrastructure.
B contractual infrastructure.
C governmental infrastructure.

9. Which of the statements about extraordinary general meetings (EGMs) of

shareholders is true?
A The appointment of external auditors occurs during the EGM.
B A corporation provides an overview of corporate performance at the
EGM.
C An amendment to a corporations bylaws typically occurs during the
EGM.

10. Which of the following is not typically used to protect creditors rights?
A Proxy voting
B Collateral to secure debt obligations
C The imposition of a covenant to limit a companys debt level

11. A primary responsibility of a boards audit committee does not include the:
A proper application of accounting policies.
B adoption of proper corporate governance.
C recommendation of remuneration for the external auditor(s).

12. Which of the following is true of shareholder activism?

A Shareholder activists rarely include hedge funds.

PRAVIN MANDORA MOB : 98258 14701 93757 14701

M.B.A (FINANCE) , I.C.W.A (INTER)
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CORPORATE GOVERNANCE
B Regulators play a prominent role in shareholder activism.
C A primary goal of shareholder activism is to increase shareholder value.

13. Which of the following is not a benefit of an effective corporate governance

structure?
A Operating performance can be improved.
B A corporations cost of debt can be reduced.
C Corporate decisions and activities require less control.

14. Which of the following best describes dual-class share structures?

A Dual-class share structures can be easily changed over time.
B Company insiders can maintain significant power over the
organization.
C Conflicts of interest between management and stakeholder groups are
less likely than with single share structures.

15. An investment analyst would likely be most concerned with an executive

remuneration plan that:
A varies each year.
B is consistent with a companys competitors.
C is cash-based only, without an equity component.

16. Which of the following best describes activist shareholders? Activist shareholders:
A help stabilize a companys strategic direction.
B have little impact on the companys long-term investors.
C can alter the composition of a companys shareholder base.

17. The ESG (environmental, social & governance) implementation method that is most associated
with avoiding certain sectors or companies is:
A best-in-class.
B thematic investing.
C negative screening.

PRAVIN MANDORA MOB : 98258 14701 93757 14701

M.B.A (FINANCE) , I.C.W.A (INTER)
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CORPORATE GOVERNANCE
18. Risks of poor governance doe not include :
A. weak control systems;
B. loss of voting control
C. ineffective decision making;
D. legal, regulatory, reputational, and default risk.

1. Which of the following statements regarding effective corporate governance systems

is least accurate?
The primary responsibilities of a corporate board of directors are to institute corporate values
A)
and establish long-term strategic objectives that are in the best interests of shareholders.

A comprehensive list of corporate governance best practices can be applied effectively to any
B)
corporation worldwide to strengthen the companys corporate governance structure.

C A corporate governance system must be continuously monitored because of changes in

) management and the board of directors.

2. Most corporate governance systems focus on the elimination or reduction of any potential
conflicts that may arise between management and:
A) directors.

B) shareholders.

C) employees.

3. In general, a corporate governance system will NOT strive to manage a potential conflict of
interest that may arise between management and which of the following groups?
A) Creditors.

B) Auditors.

C) Employees.

4. All of the following are attributes of an effective corporate governance system EXCEPT:
A) executive compensation is not excessive in comparison with other industry firms.

PRAVIN MANDORA MOB : 98258 14701 93757 14701

M.B.A (FINANCE) , I.C.W.A (INTER)
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 P R A V I N M A N D O R A G R O U P T U T I O N S
CORPORATE GOVERNANCE
have complete transparency and accuracy in disclosures regarding operations, performance,
B)
risk, and financial position.

C provide for fair and equitable treatment in all dealings between managers, directors, and
) shareholders.

5. The principal-agent problem can best be described as:

A) the agent may act for his own well being rather than that of the principal.

B) the agent may act for the well being of management rather than that of the stakeholders.

C) the agent may act for the well being of the principal rather than that of the stakeholders.

6. All of the following are responsibilities of the board of directors for a corporation EXCEPT:
A) ensure new board members are adequately trained to perform board functions.

make disclosures regarding company operations, risk, and financial position that are accurate
B)
and transparent.

C ensure that management has supplied the board with sufficient information to be fully
) informed and make appropriate decisions.

7. Which of the following statements concerning the audit committee of the board of directors
is least accurate? The audit committee:
A) should directly oversee the internal audit staff of the company.

should not have any dialogue with management in order to ensure that the committees actions
B)
are independent of management activities.

C) should consist entirely of independent board members.

8. Which of the following scenarios is NOT an example of a principal-agent problem?

A) A senior manager also serves as a director on the board of another company.
B) Top management is awarded large amounts of executive stock options.
C) A board member also serves as a consultant to the company.

9. Which of the following is NOT a risk arising from having an ineffective corporate governance
system?
A) Management may use company assets for personal or inappropriate purposes.
B) Management may enter into off-balance sheet obligations that reduce the value of a
company.
C) An otherwise profitable company may not have cash on hand to pay its bondholders.

PRAVIN MANDORA MOB : 98258 14701 93757 14701

M.B.A (FINANCE) , I.C.W.A (INTER)
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CORPORATE GOVERNANCE
10. The principal-agent problem can best be described as:
A) the agent may act for the well being of management rather than that of the stakeholders.
B) the agent may act for his own well being rather than that of the principal.
C) the agent may act for the well being of the principal rather than that of the stakeholders.

11. The purpose of the board of directors is to act as an intermediary between shareholders
and management to assure that management is acting in shareholders best interest. Which of
the following is NOT a factor that may cause directors to align more closely with managers than
shareholders?
A) Directors receive excessive compensation.
B) Directors are responsible for CEO succession planning.
C) Directors are employed by financial institutions that lend money to the firm.

12. Which of the following is least consistent with corporate governance best practice?
A) Board members conduct a self-assessment on an annual basis.

B) The CEO and Chairman of the board are separate positions held by separate individuals.

C Directors have access to in-house legal counsel whenever necessary to assess the companys
) compliance with regulatory requirements.

PRAVIN MANDORA MOB : 98258 14701 93757 14701

M.B.A (FINANCE) , I.C.W.A (INTER)
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