MGST Final (Post midterm stuff) 2024 Latest Questions & Answers Score A+., Exams of Nursing

Download MGST Final (Post midterm stuff) 2024 Latest Questions & Answers Score A+. and more Exams Nursing in PDF only on Docsity! MGST Final (Post midterm stuff) 2024 Latest Questions & Answers Score A+ Termination with cause and without cause explained: Answer- •Without "cause" = this is when the CEO or other EO has not committed an act of dishonesty or failed to act in good faith; they made decisions and they didn't work out •With "cause" = termination, firing, breach of contract, bad faith, act of dishonesty socially responsible investing Answer- investing in companies that have met criteria for environmental or social sustainability Corporate Social Responsibility Answer- a business's concern for society's welfare ESG investing Answer- The consideration of environmental, social, and governance factors in the investment process. Stakeholder Activism Answer- demands placed on a global firm by the stakeholders in the environments in which it operates Bill C-97 (Canada) Answer- stipulates that when acting in the best interests of thecorporation, directors and officers may consider, but are notlimited to the interests of shareholders and certain otherstakeholders sustainability report Answer- a comprehensive report of what a business has done, and is doing, with regard to social issues that affect it climate change impact reports Answer- portential impacts on the firm from climate change risk To increase transparecny, some companies provide additional ESG disclosure via ________________, _______________, and _________________ Answer- Examples of ESG ranking systems Answer- • Bloomberg Gender Equality Index • Corporate Responsibility Magazine "Best Corporate Citizen" • Ethisphere Institute "Most Ethical Companies" • Fortune "Best workplaces for diversity" • Newsweek "Green" environment performance ESG ratings Answer- Human Impact + Profit, TruValue Labs, Sustainalytics Human Impact + Profit Answer- HIP analyzes 32 environmental, social and governance factors TruValue Labs Answer- Evaluates companies on 26 dimensions which are combined into 6categories: Environment, social, capital, human capital, businessmodel, leadership and governance. Sustainalytics Answer- Risk ratings based on 3 components: corporate governance risk, material ESG issue risks, and idiosyncratic ESG issue risk Governance Ratings Systems Answer- Institutional Shareholder Services (ISS), Morgan Stanley Capital International (MCSI) 4 components of S&P Governance Scoring Answer- 1: Board structure and process 2: Ownership structure and influence 3: Financial stakeholder rights 4: Financial Transparency and information disclosure The existence of corporate debt creates three important system monitors or devices: Answer- 1: Debt can be a disciplinary mechanism 2: Monitoring by institutional lenders 3: Monitoring and debt rating by credit agencies To encourage the positive effects of high equity ownership, a company may adopt a ____________ ____________ __________ Answer- Target Ownership Plan Target Ownership (guidelines) Plans Answer- Require an executive to hold a minimum amount of stock Target ownership plans (guidelines) may be expressed as: Answer- - A multiple of annual compensation - Fixed number of shares - Retention approach (executives retain a % of vested awards) Explain fear of risk in exectutives: Answer- "If I had $20 million, I might be tempted to "sit on it" and take no risks - better to keep $20 million than end up with $5 million because I reached for $40 million." Do stock options encourage "excessive" risk taking? Define "acceptable"! Answer- No standard litmus test exists to distinguish excessive risk from acceptable risk. The board must determine what risk-taking incentives are acceptable, given the risk profile of the firm. The Koznuk Problem Answer- Every executive at a company would have insider knowledge when not to sell or when not to buy, and it is almost impossible to eliminate this advantage If accounting standards are compromised, manipulated, or lack transparency, then governance quality decreases as: (3 reasons) Answer- - Shareholders can less effectively detect agency problems - Oversight of management will suffer - Management incentives will be inappropriate Managerial behaviour is influenced by _____________ in which the company operates Answer- the society US governance standards are established by: Answer- Exchange listings Legislation Mostly Shareholder-Eccentric Uk governance standards are recommended in the "___ __________ _____" Answer- UK Governance code: - Separation of chairman and CEO Roles - Senior independent director - Independent Board and Committees two-tier board Answer- supervisory board of external directors, management board of internal directors - Management (Vorstrand) Board: "runs the company" - Supervisory Board (Aufsichtsrat): "oversees the company" Germany Governance Structure Answer- Two-Tiered Board A system that balances employee and shareholder interests is referred to as ___________________ Answer- codetermination Japans governance is _______________ Answer- Stakeholder-centric What is a chaebol? Answer- A Korean business conglomerate. Groups of affiliated companies that are controlled by a powerful group chairman who holds ultimate decision-making authority in all investments and activities China governance Answer- Partial transition from communism to capitalism - government continues to be primary owner Compenation in governance Answer- governance mechanism that seeks to align the interests of managers and owners through salaries, bonuses, and long term incentive comparison, such as stock options Compensation should.... Answer- - Attract Talent - Retain Talent - Motivate executive to create value for shareholders Problems to do with compensation Answer- - Excess pay costs shareholders - Poorly structured pay arrangements dilute incentives to serve shareholders and distort incentives Changes in CEO pay are almost entirely explained by changes in __________ _____ Answer- company size ______ and ___________ __ _____________ are correlated, and so executives at larger firms should be compensated Answer- size, difficulty of management optimal contracting Answer- contends that CEO pay is awarded through an efficient process, driven by competitive market forces Rent extraction Answer- belief that pay levels are the result of a market failure, which has enabled CEOs to exert influence over boards to extract compensation over and above what would be awarded in a competitive process Who sets executive compensation? Answer- •Compensation Consultants •Compensation Committees •Board of Directors •Shareholders True or False: CEO pay is higher among companies that use a consultant, but evidence suggests this is due to governance quality, not the use of the consultant Answer- True Most boards benchmark CEO pay against a peer group of comapnies comparible in _____, ___________ ,and/or ____________ Answer- size, industry, geography Potential drawbacks to benchmarking CEO compensation: Answer- Ratcheting Effect: The median compensation will tend to increase If all organizations seek to pay median or above, median will inevitably rise ______ ______ are used to set ________ _______, and ________ _________ Answer- Peer groups; competitive pay; inflate pay How do executives get paid Answer- - Current or Annual core compensation - Bonus - Deferred compensation: equity agreements - Deferred compensation: separation agreements What is Executive "core compensation" Answer- Annual base pay (fixed amount of cash) and bonuses Types of Bonuses Answer- discretionary, performance contingent, predetermined formula, target plan Stock Terminology: •Stock options: •Stock grants: •Exercise of stock grants: •Disposition: •Fair market value: Answer- •Stock options: stocks purchased at a designated price for a specific time •Stock grants: a company offers stock to employees •Exercise of stock grants: purchase of stock •Disposition: sale of stock •Fair market value: average stock price on the TSX True or False: Stock options increase in value as the stock price increases -long term investment Answer- True True or False: stock options increase in value with stock-price volatility - taking risks can pay off Answer- True Vesting Answer- Vesting is a legal term common to employer-provided benefits that means to give or earn a right to a present or future payment, asset, or benefit Phantom Stock Answer- Bonus in the form of the equivalent of either the value of company shares or the increase in value over a period of time based on meeting two conditions: •Executives must be employed for many years, or •Executives must retire from the company Compensation Restrictions include: Answer- Stock ownership guidelines: Executive is required to own a minimum amount of company stock, generally expressed as a multiple of base salary severance pay Answer- a sum of money for which an employee is eligible upon termination golden parachute Answer- •Provide executives pay and benefit following termination due to ownership change or corporate takeover (merger or combining of two separate companies) advantages of a golden parachute Answer- •It makes it easier to hire a new CEO in a climate of corporate takeovers, where one may lose one's job through no fault of his or her own. •Virtually eliminate an executive from making decisions to save his/her job at the expense of company welfare. •It gives chief executives an incentive to work toward the interests of the shareholders in case of a takeover threat. •It increases the cost to the predator company. Why are platinum parachutes awarded? Answer- Awarded in order to avoid legal battles or critical press reports How does the compensation risk affect how the manager operates the firm: Answer- Not risk enough = low manager effort Too much risk = manager avoids risky projects What are potential strategic reasons for an acquisition? Answer- Financial Synergies Diversification Change in Ownership Economies of Scale Economies of Scope Human Capital or Intellectual Property Nonstrategic reasons for an acquisition Answer- Empire building Hubris (believing they can run the company better than it is now) Herding Behaviour (they buy because competitors also bought) Compensation Incentives Three methods of takeover in Canada Answer- Merger, Solicited Takeover (Friendly), Hostile Takeover Given every M&A transaction, two parties are required Answer- Acquirer and Target The Acquirer process (of an M&A transaction) Answer- - Like any large investment decision, that requires a board - Valuation work is done in advance - May require a Fairness Opinion from an investment bank The target process (of an M&A transaction) Answer- Different process depending on whether the takeover process is initiated by the Target (Solicited) or Hostile (Unsolicited) or via a Merger merger Answer- A friendly combination of two or more companies into a single firm, usually with a new name Solicited (friendly) Takeover Answer- Target/Seller requests bids through a broad or narrow auction process, run by an investment bank - management negotiates with one or more bidders/acquirers - Target management recieves compensation (golden parachute) - Board accepts and shareholders vote hostile takeover Answer- Bidder makes offer directly to shareholders against the wishes of the Target's management or Board. The takeover process: other board duties Answer- - Disclose conflicts of interest - Corporate opportunities - Duty of confidentiality - Duty to disclose A typical target firm has one or more of the following characteristics Answer- - Weak financial performance - a stock that has significantly under performed the peer group over the past 2 years - managers who hold little or no stock in the firm - low debt levels Why don't we see as many hostile takeovers today? Answer- - Public fights can damage a company's reputation - Hostiles are usually more expensive - Too many effective defenses against takeovers - The initial bidder usually loses to a white knight Anti-takeover defenses Answer- Poison Pills - Rights offering to existing shareholders that makes the deal so expensive that the Bidder walks Staggered Boards - Staggered terms for board members that makes a proxy fight to change the board difficult - has governance implications White Knights - Search for a "friendlier company" to acquire the Target White Squire - Passive investor(s) purchase blocks of stock to frustrate bid Dual-class Shares - Different classes of shares with different number of votes per share Recapitalization - Change the capital structure, usually with debt to make the deal unattractive Golden Parachutes - Extremely lucrative severance packages - only works for small companies Regulatory approval - Fight the deal at the regulatory level, in regulated industries leveraged buyout Answer- - Small group of investors buys all publicly held stock - Takes the firm private - Group usually includes management - Purchase often financed with large amounts of high-yield debt Things we cannot control (external) GVTV Answer- 1. Others' attitudes: value of openness of discussion 2. Environment: systems, corporate culture 3. Policies and procedures 4. Consistent visible tracking records 5. Systems for raising questions Things we can control (internal) GVTV Answer- 1. Knowing strengths, weaknesses 2. Tone - how you approach a situation 3. Allies - mentors - colleagues 4. How will you talk about something? 5. Getting greater confidence - how do you get that? 6. Practising 7. Start with questions rather than assertions 8. Understanding others' motivations 9. What are bosses' motivations? 10. One-on-one or group? 11. Working through incremental steps - sequencing - don't chew through the whole elephant at once 12. Can you reframe the situation - can you help the other person reframe the situation 13. Can you find win-wins? Problem solve? Help them be successful? 14. Question your own assumptions about the situation 15. Appeal to shared purpose and value