Strategic Management & Business Policy, 12e (Wheelen/Hunger) Chapter 2 Corporate Governance

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Strategic Management & Business Policy, 12e (Wheelen/Hunger) Chapter 2 Corporate Governance 1) The board of directors has an obligation to approve all decisions that might affect the long-run performance of the corporation. Answer: TRUE Diff: 2 Page Ref: 45 Topic: Role of the Board of Directors 2) The term corporate governance refers to the relationship among the board of directors, top management, and the shareholders in determining the direction and performance of the corporation. Answer: TRUE Diff: 1 Page Ref: 45 Topic: Role of the Board of Directors AACSB: Ethical Reasoning 3) The more active professional boards are being replaced by the board as a rubber stamp of the CEO. Answer: FALSE Diff: 2 Page Ref: 45 Topic: Role of the Board of Directors AACSB: Ethical Reasoning 4) Hiring and firing the CEO and top management is one of the five responsibilities of the board of directors. Answer: TRUE Diff: 2 Page Ref: 45 Topic: Role of the Board of Directors 5) Those directors who fail to act with due care and allow the corporation to be harmed may be held personally liable. Answer: TRUE Diff: 3 Page Ref: 45 Topic: Role of the Board of Directors AACSB: Ethical Reasoning 6) A 2008 McKinsey and Company survey found that less than 10 percent of a board's time is spent on strategy. Answer: FALSE Diff: 3 Page Ref: 46 Topic: Role of the Board of Directors AACSB: Reflective Thinking 1 Copyright © 2010 Pearson Education, Inc. 7) The lowest degree of involvement for a board of directors is the catalyst level of interaction. Answer: FALSE Diff: 1 Page Ref: 47 Topic: Role of the Board of Directors 8) Generally, the smaller the corporation, the less active is its board of directors. Answer: TRUE Diff: 2 Page Ref: 48 Topic: Role of the Board of Directors AACSB: Reflective Thinking 9) Outside directors may be executives of other firms but are not employees of the

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