CH2 Corporate Governance

_______________________ is a mechanism established to allow different parties to contribute capital,

expertise,
and labor for their mutual benefit
corporation is fundamentally governed by the _______________________ overseeing
_______________________ with the concurrence of the _______________________

_______________________ refers to the relationship among these three groups in determining the direction
and performance of the corporation.

_______________________ A board should at the minimum carry out this task

_______________________ More active boards perform this task in addition to monitoring.
_______________________ Only the most active boards take on this task in addition to the two previous
ones.

_______________________ Never knows what to do, if anything; no degree of involvement.

_______________________ Permits officers to make all decisions. It votes as the officers recommend on action issues.
_______________________ Formally reviews selected issues that officers bring to its attention.
_______________________ Involved to a limited degree in the performance or review of selected key decisions,
indicators, or programs of management

_______________________ Approves, questions, and makes final decisions on mission, strategy, policies, and
objectives. Has active board committees. Performs fiscal and management audits.

_______________________ Takes the leading role in establishing and modifying the mission, objectives, strategy, and
policies. It has a very active strategy committee.

_______________________ (sometimes called management directors) are typically officers or executives

employed by the corporation
_______________________ sometimes called non-management directors) may be executives of other firms
but are not employees of the boards corporation

_______________________ which states that problems arise in corporations because the agents (top
management) are not willing to bear responsibility for their decisions unless they own a substantial
amount of stock in the corporation.

_______________________ proposes that, because of their long tenure with the corporation, insiders (senior
executives) tend to identify with the corporation and its success. outsiders are not truly objective and
should be considered more as insiders than as outsiders

_______________________ who, though not really employed by the corporation, handle the legal or
insurance work for the company or are important suppliers (thus dependent on the current management
for a key part of their business).

_______________________ who used to work for the company, such as the past CEO who is partly
responsible for much of the corporations current strategy and who probably groomed the current CEO as
his or her replacement

_______________________ who are descendants of the founder and own significant blocks of stock
(with personal agendas based on a family relationship with the current CEO).

_______________________ the inclusion of a corporations workers on its board, began only recently in the
United States.

_______________________ occurs when two firms share a director or when an executive of one firm sits on
the board of a second firm.

_______________________ occurs when two corporations have directors who also serve on the board of a
third firm, such as a bank

_______________________ a Japanese term for a set of companies with interlocking business relationships
and share-holdings

______________________ is the directing of activities toward the accomplishment of corporate objectives.

_______________________ is a description of what the company is capable of becoming.
_______________________ that is, leaders who provide change and movement in an organization by
providing a vision for that change

_______________________ in which their confidence blinds them to information that is contrary to a

decided course of action

II ENUMERATION
two primary responsibilities that are crucial to the effective strategic management of the corporation: (PM)
1.
2.

MEMBERS OF A BOARD OF DIRECTORS (IORFA)

1.
2.
3.
4.
5.

Role of the Board in Strategic Management (MEI)

1.
2.
3.

five board of director responsibilities, listed in order of importance: (SHCRC)

1.
2.
3.
4.
5.