TYBMS (EME) Semester VI COPORATE GOVERNANCE

MULTIPLE CHOICE QUESTIONS

1. The primary stakeholders are:

a. Customers. b. Suppliers. c. Shareholders. d. Creditors.

2. The goal of corporate governance and business ethics education is to:

a. Teach students their professional accountability and to uphold their personal Integrity to

society. b. Change the way in which ethics is taught to students. c. Create more ethics standards by

which corporate professionals must operate. d. Increase the workload for accounting students.

3. The corporate governance structure of a company reflects the individual companies’:

a. Cultural and dance system. b. Legal and global system. c. Social and regulatory system. d. Large firms.

4. The internal audit function is least effective when the department:

a. Is non-independent. b. Is competent. c. Is objective. d. Exhibits integrity

5. Under the _____________, both internal and external corporate governance mechanisms are

intended to induce managerial actions that maximize profit and shareholder value.

a. Shareholder theory. b. Agency theory. c. Stakeholder theory. d. Corporate governance

theory.

6. One of the objectives of the Sarbanes-Oxley Act was to:

a. Increase the cost of compliance with federal regulations.

b. Force foreign companies to delist from U.S. capital market exchanges.

c. Improve the quality and transparency of financial reporting.

d. Increase the compliance burden for small companies.

7. An organization’s appropriate tone at the top promoting ethical conduct is an example of:

a. Ethics sensitivity. b. Ethics incentives. c. Ethical behaviour. d. Consequentiality.

8. An independent director is one who:

a. Did not attend a school supported by the company. b. Does not have outside relationships

with other directors. c. Does not have any other relationships with the company other than his or

her directorship. d. Incompetency.

9. The chairperson of the board of directors and CEO should be leaders with:

a. BLUR Vision skills. b. The ability to motivate. c. stability. d. inability.

10. A board that is elected in a classified system is known as a:

a. Diversified board. b. Staggered board. c. Rotating board. d. Declassified board

Set 2

1.The directors who are expected to bring impartiality, objectivity and independence in their

decision making are, a] Non executive directors b] Auditors c] Executive directors d] Promoters

2. Director performance can be gauged by

a) awareness of the organization’s strengths and weaknesses and of the impact of the board’s

decisions upon them

b) generating and recognize imaginative solutions and innovations

c) showing a readiness to take decisions, make judgments, take action and make

commitments

d) it includes awareness, generating new ideas and readiness to take decisions

3. Independence of the board is critical because

a) it ensures the board fulfils its oversight role objectively and holds the management

accountable to the shareholders

b) it gives the board more powers

c) it makes the board earn lot of profits

d) they add sophistication to the board

4. Nominee director cannot be termed independent director because

a) nominee directors are only reporting to the financial institution as they are employed by

them

b) nominee directors do not retire by rotation

c) they need to attend only those meeting where financial matters are being discussed

d) nominee directors will be senior people

5. A director having substantial powers of the management of the company is called

a) managing director

b) whole time director

c) chief executive officer

d) Chairman

6. The stock exchange that has proposed new listing standards that would require companies to

improve their corporate governance to restore public confidence in corporate governance.

a) NASDAQ

b) NYSE

c) NSE

d) BSE

8. Economies have been becoming more integrated due to

a) globalisation

b) privatisation

c) corporate governance

d) foreign Investments

9. The advantage of globalisation is that

a) corporations have greater flexibility to operate across boarders

b) increased the likelihood of economic disruptions in one nation affecting all nations

c) Growth of local industries and manufacturing

d) spread of materialistic lifestyle and attitude that sees consumption as a means to

prosperity

10. Nominee director cannot be termed independent director because

a) nominee directors are only reporting to the financial institution as they are employed by

them

b) nominee directors do not retire by rotation

c) they need to attend only those meeting where financial matters are being discussed 4

d) nominee directors will be senior people

11. Different models of corporate governance are,

a) Anglo-Saxon Model

b) German model

c) Japanese model

d) Indian model

12. The risks associated with auditing are

a) expected misstatement

b) control risk

c) inherent risk

d) there are no risks

13. When corporate fail to follow ethical practices

a) the people who suffer directly are the investors

b) it results in corporate crimes

c) corporate governance suffers

d) the company will earn lot of losses

14. Derivative actions are

a) actions are an effective guard against oppressive decisions

b) persons having same locus stand can make a common compliant

c) empower the small shareholders

d) an expensive process

15. In recognition of excellence in corporate governance, the following awards have been

constituted,

a) 'Golden Peacock Award for Excellence in Corporate Governance - 2002'

b) 'ICSI National Award for Excellence in Corporate Governance'

c) Golden Peacock Global Award for Corporate Governance in Emerging Economies

d) The National Award for corporate governance

16. Ethical leadership means the following under corporate governance

a) believing that institutional sustainability comes first

b) foster a climate of trust and candor

c) establish board room relationships based on trust

d) there is no such thing as ethical leadership

17. The main functions of RBI include

a) regulating the financial system

b) banker to banker

c) manager of foreign exchange

d) redressal of investor grievances

18. The distinctive features of the Anglo-Saxon model are,

a) Clear divide between owners and the management

b) High tension model

c) Institutional investors are short term investors

d) Promoter shareholders are dominate owners

19. When companies want to list their shares in any exchange they enter into __________

agreement with the stock exchange.

a) Listing Agreement

b) Memorandum for Listing

c) Contract or Listing

d) Prospectus

20. The regulations for the internal management of the company are laid out in the __________.

a) Articles of Association

b) Rule book of the company

c) The Charter

d) Memorandum of Association

21. __________ is a serious legal and regulatory contravention of the process of governance law that

is of a recent origin.

a) corporate crime

b) fraud

c) abetting suicide

d) Corporate

22. The CBI has formed a __________to investigate and tackle the growing menace of economic

crimes.

a) Economic Intelligence Wing

b) SFIO

c) Enforcement Directorate

d) Social Welfare Wing

23. The __________ view upholds that only social responsibility of business is to create

shareholder wealth and the pursuit of social goals dilutes businesses primary purpose.

a) free market view

b) Gandhian view

c) philanthropic view

d) classical view

24. The __________ policy is the process a government, central bank, or monetary authority of a

country uses to control (i) the supply of money, (ii) availability of money.

a) monetary policy

b) fiscal policy

c) investment

d) disinvestment

25. Social responsibility is the performance of activities by a private enterprise without the

__________in its philosophy.

a) expectation of direct economic gain or loss

b) expectation of positive result

c) expectation of concessions

d) expectation of awards and recognition

26. Bribery and corruption, tax evasion, money laundering, counterfeiting and piracy, and human

trafficking are all instances of __________.

a) disadvantages of globalisation

b) impact of economic slow down

c) irregular government policies

d) crimes

27. In order to eliminate a conflict of interest situation and ensure alignment of investors

interest with the exchanges, the process that was introduced was __________.

a) demutualisation and corporatisation of the stock exchanges

b) rolling settlement

c) dematerialisation

d) registration of brokers and sub brokers

28. The objects of the company are defined in the __________.

a) Memorandum of Association

b) Articles of Association

c) Board's Report

d) Prospectus

29. The foundation for corporate culture are laid by _______________

a. Corporate members b. Competitors c. Founders d. Industry standard

30 An organization’s ______________ embraces the behavior, rituals and shared meaning held by

employees that distinguishes the organization from all others.

a. External environment b. Culture c. Dominant culture d. Ethics

31.Components of corporate culture includes ____________

a. Vision and values b. Practices and people c. Narrative and place d. All of these

32.Commitment, competence and consistency are three distinct characteristics that result in

______________ a. Culture building b. Values c. Organizational socialization d. Attitudes

33. Types of corporate culture are ____________

a. Clan culture and Adhocracy culture b. Market culture and hierarchy culture c. Both (a) & (b) d.

Business condition

34. The practices of a company for which it is accountable in relation to other parties is called

____________ a. Social responsibility b. Code of Ethics c. Values d. Culture

35. Culture needs to be kept alive by ____________

a. Workers b. Salesman c. Top managers d. Human resource managers

36. National culture is based on ______________

a. Language b. The territory of the state c. The sense of belonging of a people d. The nation-

state.

37.A low context culture is ___________

a. A culture where much goes unsaid b. A culture in which communication is clear and direct

c. A culture where ambiguity is the norm, and directness is avoided d. A culture in which

body language and ‘reading between the lines’ are important

38. Characteristics of organizational culture include all but which one of the following?

a. Common language, terminology and norms of behavior b. Sustainability policies

c. Preference for formal or informal communication d. Rulebook of do’s and don’ts for staff

39. The primary stakeholders are .a. Consumers b. Suppliers c. Shareholders d. Creditors

40.The corporate governance structure of a company reflects the individual companies

a. Cultural & economic system b. Legal & business system c. Social& regulatory system d. All of these

41. Corporate governance is a form of

a. External regulation b. Self regulation c. Government control d. Charitable action

4 2. CSR & corporate governance represent a -------- between business and society. a. Social climate

b. Special contract c. Special climate d. Social contract

43. The framework for establishing good corporate governance & accountability was originally set up

bya. Rowntree Committe b. Cadbury Committee c. Nestle Committee d. Thornton Committee

44. ------ may be defined as the enhancement of long-term shareholders while at the same time

protecting the interests of other stakeholders.

a. Business ethics b. B. CSR c. Cultural relativism d. Corporate governance 45. Which of the following is/are feature of corporate governance?

a. Non- universality b. Accountability c. Ambiguity d. None of these

46. There are usually …………… key participants in corporate governance. a. Three b. Four c. Five d.

Eight

47.Corporate governance is a …………… approach. a. Top-down b. Bottom-up c. Hybrid d. Scientific

48.Corporate governance is concerned with the formation of …………… term objective a. Very short b.

Short c. Medium d. Long

32 Seperation of ownership from management is a problem of ____________ theory

A. Shareholder B. Financial C. Agency D. Stakeholder

33 In stewardship theory managers are ___________

A. Controlled B. Directed C. Left on own D.None of above 34 Corporate

governance refers to _______________

A. Procedures B. Structures C. Policies D. All of the above 35 The framework for establisihing good corporate governance and accountability was originally set up

by

A. Cadbury committiee B. Nestle Committiee

C. Rowntree Committiee D. Thompson Committiee

36 Shareholder theory is supposed to be a ___________ theory

A. Nominal B. Normative C. Subjective D. None of above

37 Stakeholder group is a ___________ group than shareholder

A. Similar B. Smaller C. Larger D. None of above

38 Stakeholders include ____________

A. Employees B. Vendors C. BOD D. All of the above

39 Satisfied stakeholders may behave in the following way

A. Gossip about the company B. Demonstrate loyalty

C. Seek change D.Leave the organisation

40 __________ may be an internal obstacle in good corporate governance

A. Disloyal customers B. Unethical competitors

C. Fraud vendors D.Bad employees

41 SEBI has sep up a seprtate cell for investor grievances which is ______________________

A. SEBi corporate Redressal system B. SEBi complaints Redressal system C. SEBi complaints

Regulation system D. SEBi corporate Regulation system

42 According to OECD the institutional investors must __________ dicslose their policy A.

Privately B. Directly C. Publicly D. Not

43 ___________ is a additional resonsibility of Institutional shareholders A. Meeting with

chairmen B. Voting C. Attending meetings D.Appointing proxy

44 The related party transactions are generally ___________

A. Bailouts B. Financial assistance C. Asset sale D. All of above 45 ______________ should be prohibited in trading of shares

A. Transperancy B. Insider trading C. Proper information D. Process controls

46 The shareholders have the right to _______________

A. Inspect the registers B. Vote in meeting C. Transfer shares D.All of above 47

Organisations should ____________ the rights of shareholders

A. Respect B. Uphold C. Propect D. All of above

48 "In India, _________ launched bilateral dialogue to improve corporate governance " A.

OPEC B. OECD C. OEDC D. OPED

49 Shareholders are _________ owners of the company

A. Partially the B. Secondary C. Primary D. None of above

50 RPT means _________________

A. Related Party Tasks B. Related Party Transactions

C Related Problems & Tasks D. Related Party Teams

51. Government, society customer etc are collectively known

as a) Creditors b) Stakeholders c) Stakeholders d) Trustee

52. Which of the following is the forum for corporate governance, located with in IFC and co-

founded by world bank and OECD a) SEBI b) GCGF c) WHO d) UNICEF

53. As per clause 49, audit committee should consist of minimum of how many director

a) 3 b) 4 c)5 d)6

54. Which of the following committee identifies persons who are qualified to become directors

and who may be appointed in senior management?

a) Nomination b) Remunaration c) Audit d) Appraisal

55. which of the following trading refers to disclosing unpublished price sensitive information to

an outsider

a) Bull b) Share c) Insider d) Corporate

56. Which of the following is a set of rules which are accepted as general principles in an

organization?

a) Selection policy b) Code of ethics c) Honesty pledge d) Leadership

57. Who are the major player in the integrity pact

a) CVC b) CBR c) RBI d) SBI

58. Features of business ethics includes

a) Lays support to social welfare functions b) Earn profit c) Business earning d) Guidelines

59. What are the organization ensures that compliance with law is filled by a desire to abide by

the laws

a) Government b) Public c) Customer d) Creditor

60. Most companies begin the process of establishing organizational ethics programs by

developing

a) Code of conduct b) Law c) Ethics d) Corporate

61. The form of ethics that endeavours to help professionals decide what to do when they are

confronted with case or situation that raises an ethical question or moral problem is referred

as

a) Personal Ethics b) Organizational Ethics c) Professional ethics d) Business ethics

62. A document prepared to guide organization members when encountering ethical dilemmas

is

a) Code of ethics B) code of conduct c) Profit d) AOA

63. The pivotal role in any system of corporate governance is performed by

a) Board of directors b) Shareholders c) Government d) Stakeholder

64. According to ICSI corporate governance is

a) The applicant of business management practices b) Compliance of law in true letter and

spirit c) Adherence to ethical standards for effective management d) making profit

65. A criminal offence committed only by directors of a limited company

a) Fraudulent trading b) Ethical trading c) Comparative trading d) Monopolistic trading

66. Factors influencing corporate governance include

a) Institutional environment b) Financial structure c) Ownership structure d) Structure

67. Which of the following is not one the underlying principle of the corporate governance

combined code of practice

a) Acceptability b) Accountability c) Openness d) Integrity

68. The word governance comes from

a) Latin b) Italian c) Indian d) American

69. Which of the following is not an ethical issue

a) Organisational system related b) Corporate issue c) Individual Issue d) Communication

issues

70. What type of ethical issue does a green company resolves

a) Environment b) Finance c) Social d) Political

71. Which ethical principle specifies to do what is good

a) Governance b) Ethical practice c) Beneficence d) Least harm

72. What is the philophophical study of moral values and rules

a) Morality b) Ethics c) Law d) marketing

73. Which of the following descriptions applicable to different types of directors and their

independence is incorrect?

A Independent executive director. B Independent non-executive director. C Non-

independent executive director. D Non-independent non-executive director

74. Which of the following regarding agency theory is correct?

A Agency theory only applies to large entities. B Agents act in the best interest of the

principal. C Agents are assumed to be in a position of power. D Agency theory defines the

relationship between agents and directors.

75. Which of the following regarding the composition of the nomination committee of a listed

company is most correct?

A.A minimum of three members chaired by an executive director.

B A majority of independent directors chaired by an independent director.

C A majority of three members of whom most are independent directors.

D A minimum of one independent director who also chairs the committee.

76. Which of the following regarding corporate governance is correct?

Corporate governance can temper growth.

B Good corporate governance can result in excessive risk-taking.

C Corporate governance often results in prompt and effective decision-making.

D The aim of corporate governance is to protect the interests of shareholders and the local

economies.

77. Which of the following statements regarding institutional shareholders is correct?

A These shareholders have extensive power to monitor the activities of the company.

B Institutional shareholders prefer to exert their power privately rather than publicly.

C These shareholders often aim to improve outcomes rather than sell their shareholding.

D Institutional shareholders are known to publicly use their voting power to encourage

sound corporate governance.

78. The OECD argues that corporate governance problems arise because

a) Ownership and control is separated

b) Managers always act in their own self interest

c) Profit maximum

d) Stakeholders have differing levels of power

79. The constituents of corporate governance are

a) Board of directors b) The shareholders c) Management d) CEO

80. Good corporate governance recognizes the diverse interest of

a) Shareholders b) Lenders c) Government d) Customer

81. Good corporate governance is simply good business it ensures

a) Transparency in business transactions

b) Statutory and legal compliances

c) Protection of shareholders interest

d) Earning high profit

82. Key constituents of corporate governance are?

a) Board of Directors b) Shareholders c) Management d) All of the above

83. The goal of corporate governance and business ethics education is to:

a) Teach students their professional accountability and to uphold their personal Integrity to

society.

b) Change the way in which ethics is taught to students.

c) Create more ethics standards by which corporate professionals must operate.

d) Increase the workload for accounting students.

84. .An organization’s appropriate tone at the top promoting ethical conduct is an example

of:Ethics sensitivity.

b) Ethics incentives.

c) Ethical behaviour.

d) Consequentiality.

85. The chairperson of the board of directors and CEO should be leaders with:

a) Vision and problem solving skills.

b) The ability to motivate.

c) Business acumen.

d) All of the above.

86. Components of corporate culture includes

a) Vision and values b) Practices and people c) Narrative and place d) All of these

87. The foundation for corporate culture are laid by

a) Corporate members

b) Competitors

c) Founders

d) Industry standard

88. An organization’s obligation to act and protect and improve society’s welfare as well as its

own interest is referred as

a) Organizational social responsibility

b) Organizational social responsiveness

c) Corporate obligation

d) Business ethics

89. Most companies begins the process of establishing organizational ethics programs by

developing

a) Ethics training program b) Code of conduct c) Hidden agenda d) Ethics enforcement

committee

90. A company may be insolvent if it

a) Has negative working capital

b) Cannot meet its budgeted level of profit

c) Makes losses

d) Cannot pay creditors in full after realization of assets

91. The word governance comes from

a) Latin root

b) Italian

c) Indian

d) American

92. Which of the following would most effectively act as the primary objective of a business

organization?

a) To make profit

b) To procure resources

c) To communicate with shareholders

d) To make advertising

93. Codes of ethics are statements of value and principles that determine?

a) Purpose of the company

b) Profit of the company

c) Growth of the company

d) Regulation

94. What enables employees understand how business ethics relates to all operational issues in

the organization?

a) Ethics committee

b) Ethics training

c) Board of directors

d) Shareholders

95. What is the importance of ethical committee?

a) Social and economical

b) Ensure good corporate citizenship

c) Both a and b

d) Only b

96. The benefits for companies to properly implement its ethics committee can be?

a) Create more stable operating environments

b) Enhance reputation

c) Give improved access to new market

d) All of the above

97. The pivotal role in any system of corporate governance is performed by?

a) Board of directors

b) Shareholders

c) Government

d) Stakeholders

98. A criminal offence committed only by directors of a limited company

a) Fraudulent trading

b) Ethical trading

c) Competitive trading

d) Monopolistic trading

99. Following are the elements of effective ethics training programme

a) Employment term

b) Performance appraisals

c) Corporate governance

d) All of the above

100. Which of the following does the term corporate social responsibility relate to?

a) Ethical code

b) Environment practice

c) Community investment

d)All of the above

101. Who will be able to provide an overarching view of the how the company. Does its

business?

a) Ethics committee

b) Integrity pact

c) Ethics training

d) Board of directors

102. Which ethical practice specifies to do what is good?

a) Beneficence

b) Least harm

c) Both a and b

d) None of the above

103. Most companies begin the process of establishing organizational ethics programs by

developing.

a) Code of conduct

b) Law

c) Human resources

d) Marketing

104. A document prepared to guide organization members when encountering ethical

dilemmas is called as?

a) Code of ethics

b) Code of conduct

c) None of the above

d) Only b

105. Which of the following is not the ethical issue?

a) Organization system related

b) Corporate issues

c) Individual issues

d) Communication issues

106. What in an organization ensures that compliance with law is fuelled by a desire to

abide by the law?

a) Ethical climate

b) Manger

c) Information system

d) Control system

107. The philosophical study of moral values and rules is called as.

a) Human resources management

b) Ethics

c) Law

d) All of the above

108. What type of ethical issue does a green company resolves?

a) Environment

b) Financial

c) Social

d) Political

109. The form of ethics that endeavours to help professionals decide what to do when

they are confronted with a case or situation that raises an ethical question or moral problem

is referred to as:

a) Personal ethics

b) Organizational ethics

c) Professional ethics

d) Business ethics

110. The statements of values and principles that determine the purpose of the company

is called as?

a) Code of ethics

b)Offer documents

C) Prospectus

d) None of the above

111. A written corporate code of conduct fulfils following functions?

a) Human resources

b) Marketing

c) Communicative functions

d) None of the above

112. What do you mean by CSR?

a) Corporate social responsibility

b) Company social Responsibility

c) Company Society Responsibility

d) None of the above

113. In conduct of their activities the business firms are expected to be, which of the

following?

a) Fair business practices

b) Only Profit oriented

c) Only Sales oriented

d) Only Expansion

114. Every business running for the profit motive, but it may affect following goals of the

business

a) Social goals

b) Competitive goals

c) Marketing goals

d) Sales goals

115. Ethical problems and phenomena arise in following functional areas of companies?

a) Marketing

b) Human Resources

c) Only a

d) Both a and b

116. What is the role of the government in business ethics?

a) Ensuring business survival

b) Staffing of employees in companies

c) Product branding of the company

d) Ensuring corporations act according to the rules and norms of society

117. What are the ethical issues confronted in marketing ethics?

a) Black marketing

b) Misleading advertising

c) Content in the advertising

d) All of the above

118. What are the ethical issues in finance?

a) Over billing expenses

b) Fake reimbursement

c) Only b

d) Both a and b

119. Who is responsible for overall ethical climate and organizational culture which

decides its destiny?

a) Customer

b) Competitor

c) Board of directors

d) Shareholders

120. What are the factors influencing business ethics?

a) Cultural differences

b) Organizational behaviour

c) Both a and b

d) Only a

121. What are the features of organizational ethics?

a) Lays support to social welfare functions

b) Provides code of business conduct

c) Acts as guiding principles of business

d) All of the above

122. Who among the following is responsible for Monitoring the effectiveness of the

company’s governance ?

a) Board of directors

b) Shareholders

c) Consumers

d) Staff

123. Agency theory specifies mechanisms to reduce

a) Organisational motive

b) Corporate value

c) Agency loss

d) Agency profit

124. Satisfied stakeholders may behave in which of the following ways

a) Leave organization

b) Demonstrate loyalty

c) Gossip about organization

d) Seek to change things in the organisation

125. In India Corporate Governance was initiated by __________.

a)RBI

b)IRDA

c) SEBI

d) SBI