The boards of most publicly owned corporations are composed of both inside and o

Question

The boards of most publicly owned corporations are composed of both inside and outside directors. People who favor a high proportion of outsiders state that outside directors are______________.

A. less likely to have greater industry knowledge and expertise than inside directors and top management.

B. more biased but less likely to evaluate? management's performance objectively than are inside directors.

C. less biased and more likely to evaluate? management's performance objectively than are inside directors.

D. more likely to have their own best interests at heart versus the? corporation's best interests.

E. more likely to have greater industry knowledge and expertise than inside directors and top management.

Which of the following is NOT necessarily a BENEFIT of the implementation of? Sarbanes-Oxley?

A. Requires that the? audit, nominating, and compensation committees be staffed entirely by outside directors.

B. If an? individual, group, another company own more than? 50% of the voting? shares, they become exempt from certain NYSE and NASDAQ requirements

C. More difficult for firms to? post-date executive stock options.

D. Fewer adjustments for unusual charges and? write-offs, which in the past have been used to boost reported earnings

E. Increased disclosure requirements

In a research? study, investors indicated they are willing to pay more for a? corporation's stock because of certain reasons. Of the? following, which is NOT a primary reason they would pay? more?

A. Good governance leads to better performance over? time,

B. If it is known to have good corporate governance.

C. Governance is a major strategic issue

D. Good governance reduces the risk of the company getting into? trouble,

E. Good governance automatically reduces accounting and auditing costs.

Explanation / Answer

1) c

A - outside directors have greather industry knowledge since they are external directors to company and also dealing with many companies in the markets.

B & C- They are less baised and since they are indepetend they play an role of scruitany and challenging decission of inside directors or they evaluate the inside directors objectivity.

D- Statement regarding industry knowledge is correct but outside direcrors didn't have expertise like inside directors and top manangement .

2) C

A- Maintaining a audit , nomination and compensating committe is a benifit becuase it protect the interest of shareholders to maximise profit.

B- I individual, group, another company own more than 50% of the voting shares, they become exempt from certain NYSE and NASDAQ requirements , its a one the benifit following sarbanes - oxley

C- When there Post -date executive stock option , it is very difficult to follow sarebanes oxley.

D- It enables boost earnings using fewer adjustments.

E- It enhance disclosure requirement , this will increase openess and reduce concealment .

3) C

Investors will be very willing to pay and invest in a company it has ,

A-company have a sound governance which help to lead sucess of company

B- if the company well reputed for its governance

D- governance manage risk ang have sound internal controls.

E- also governance reduce the cost on accounting and audit , this will increase earnings for invesrors.

C- if the company have a issue in governance , it create a bad image among public, so they willnot ready for paying more.

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