cobgove q1

Which of the following is NOT a goal of Enterprise Governance?
a) Ensuring objectives are achieved
b) Managing risks appropriately
c) Managing organizational resources responsibly
d) Maximizing short-term profits only

d

Enterprise Governance has two main dimensions:
a) Conformance and Performance
b) Oversight and Strategy
c) Transparency and Accountability
d) Rules and Procedures

a

Performance in Enterprise Governance focuses on strategy, value creation, and helping the board understand risks and key drivers.

t

Corporate Governance is best defined as:
a) The day-to-day management of an organization
b) The system of rules, practices, and processes by which corporations are directed and controlled
c) A financial reporting standard
d) A form of government regulation

b

Which of the following is NOT a direct benefit of good Corporate Governance?
a) Creates transparent rules and controls
b) Facilitates raising capital
c) Eliminates all risks permanently
d) Improves long-term viability

c

Corporate Governance involves balancing the interests of shareholders, management, customers, suppliers, financiers, government, and the community.

t

Which of the following is NOT a principle of Corporate Governance?
a) Promote ethical and responsible decision making
b) Safeguard integrity in financial reporting
c) Recognize and manage risk
d) Maximize executive compensation

d

Management in corporate governance is primarily responsible for:
a) Setting board strategy and oversight
b) Day-to-day operations, compliance, and providing information to the board
c) Creating external policies for industry regulation
d) Appointing directors

b

Management replaces the oversight function of the board in corporate governance.

f

Responsibility in corporate governance refers to:
a) The ability to influence outcomes
b) The duty or obligation to act in a certain way and be accountable
c) A legal right to impose sanctions
d) The authority to allocate resources

b

The Sarbanes-Oxley Act is also known as:
a) Public Company Transparency Act of 2002
b) Corporate Integrity and Reform Act of 2002
c) Public Accounting Reform and Investor Protection Act of 2002
d) Financial Stability and Compliance Act of 2002

c

The Sarbanes-Oxley Act imposed strict rules on accountants, auditors, and corporate officers, with more stringent recordkeeping requirements.

t

What was the main scheme used in Enron’s scandal?
a) Ponzi scheme with shareholders
b) Insider trading
c) Window dressing accounting records to reflect sound financial condition
d) Hiding losses in offshore accounts

c

Which accounting method and entity type were central to the Enron scandal?
a) Accrual accounting and foreign subsidiaries
b) Cash basis accounting and shell corporations
c) Mark-to-market accounting and Special Purpose Entities (SPEs)
d) FIFO accounting and limited partnerships

c

Arthur Andersen was involved in the Enron scandal as:
a) A whistleblower
b) Both external auditor and consultant, later charged with obstruction of justice
c) Only the tax adviser
d) A regulatory watchdog

b

Could the Enron fiasco have been prevented?
a) No, it was inevitable due to market conditions
b) Yes, through stronger oversight, ethical leadership, auditor independence, and whistleblower protection
c) Only if Enron diversified into other industries
d) No, because investors lacked interest

b

What was the main scheme used by WorldCom executives to inflate profits?
a) Hiding debt in offshore accounts
b) Improperly capitalizing telecommunication line expenses as assets
c) Overstating revenues through fake sales
d) Manipulating stock options

b

WorldCom executives inflated profits in order to maintain the company’s stock price.

t

Which of the following was a positive aspect of WorldCom?
a) Aggressive acquisition strategy
b) Fraudulent accounting
c) Poor internal control
d) Unethical practices

a

Which of the following was a negative aspect of WorldCom?
a) Market capitalization
b) Poorly managed acquisitions
c) Growth strategy
d) Employee incentives

b

WorldCom’s culture of silence and fear contributed to weak internal controls.

t

Was the external audit firm at fault in the scandal?
a) No, it had no responsibility
b) Yes, Arthur Andersen failed to act on red flags and ignored memos from employees
c) No, because forensic accountants were responsible
d) Yes, but only for minor oversights

b

Transparency, accountability, ethical leadership, risk management, and compliance are key aspects of responsibility in corporate governance.

t

Which of the following best defines responsibility in corporate governance?
a) The obligation of leaders to maximize short-term profits only
b) The duty of leadership to act in the best interests of the company and its stakeholders
c) The ability of managers to avoid accountability
d) The process of delegating tasks within a company

b

The Board of Directors (BOD) is the primary force influencing corporate governance.

t

The basic principles of corporate governance include accountability, transparency, fairness, responsibility, and risk management.

t

Which of the following BEST describes corporate governance?
a) A company’s marketing strategy
b) The structure of rules, practices, and processes used to direct and manage a company
c) The distribution of profits among shareholders
d) The personal leadership style of a CEO

b

Dependency decreases when someone possesses resources that are scarce, important, and nonsubstitutable.

f

Informational power can diminish once information is widely shared.

t

Power is defined as:
a) The ability to avoid responsibility within an organization
b) The ability to influence the behavior of others to achieve desired outcomes
c) The authority tied only to someone’s formal title
d) The willingness of others to conform

b

A supervisor warns employees of penalties for not following safety rules. This is an example of:
a) Reward power
b) Coercive power
c) Legitimate power
d) Informational power

b

A team leader earns respect because of specialized technical skills. This reflects:
a) Referent power
b) Expert power
c) Coercive power
d) Reward power

b

Which type of power relies on admiration and identification with the leader’s personal qualities?
a) Coercive power
b) Informational power
c) Referent power
d) Legitimate power

c

An employee who holds critical project data until needed demonstrates:
a) Informational power
b) Expert power
c) Reward power
d) Legitimate power

a

A manager motivates staff by offering bonuses and recognition. This is an example of:
a) Reward power
b) Coercive power
c) Legitimate power
d) Referent power

a