MANA quiz 5

What are the primary reasons individuals and institutions own shares of corporations?

To earn dividends and receive capital gains.

What rights do shareholders have?

Shareholders are entitled to vote, receive information, select directors, and attempt to shape corporate policies and action.

What is the role of the board of directors in corporate governance?

The board is responsible for setting overall objectives, selecting and supervising top management, and assuring the integrity of financial accounting.

What challenges do corporate boards face in modern governance?

Balancing the interests of shareholders, managers, and other stakeholders.

What reforms have been proposed for corporate boards?

To make boards more responsive to shareholders and more independent of management.

What is the argument in favor of high executive compensation?

It is justified by performance and provides necessary incentives for innovation and risk-taking.

What do critics argue about high executive compensation?

They believe it is too high and hurts firm competitiveness while undermining employee commitment.

How have shareholders influenced corporate actions?

By forming organizations, intervening in board elections, and filing lawsuits.

What is social investment in the context of shareholders?

Screening stocks according to environmental, social, and governance criteria and promoting shareholder proposals on social responsibility.

What is the role of the Securities and Exchange Commission (SEC)?

To assure the accuracy and transparency of financial information and curb financial fraud and insider trading.

What is insider trading?

The illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information.

What is a proxy in corporate governance?

An authority to act on behalf of a shareholder, especially in voting at shareholder meetings.

What does 'say-on-pay' refer to?

A provision that allows shareholders to vote on the compensation of top executives.

What is a hedge fund?

An investment fund that employs various strategies to earn active returns for its investors.

What is a private equity firm?

An investment firm that provides capital to companies in exchange for equity ownership.

What are shareholder lawsuits?

Legal actions taken by shareholders against a company or its executives for perceived wrongdoings.

What are social responsibility shareholder resolutions?

Proposals submitted by shareholders to address social or environmental issues within a company.

What is executive compensation?

The financial payment and benefits provided to top executives of a company.

What is corporate governance?

The system by which companies are directed and controlled, including the relationships among stakeholders.

What are institutional investors?

Organizations that invest large sums of money in securities, real estate, and other investment assets.

What are the five key consumer rights?

The rights to safety, to be informed, to choose, to be heard, and to privacy.

What does the consumer movement aim to achieve?

It aims to promote the interests of consumers by balancing market power between sellers and buyers.

What do consumer protection laws and regulatory agencies ensure?

They ensure consumers are treated fairly, receive adequate information, are protected against hazards, have free choices, and have legal recourse.

What are three approaches to safeguarding online consumer privacy?

Consumer self-help, industry self-regulation, and protective legislation.

What issues have businesses raised regarding product liability?

Businesses have complained about the number of product liability lawsuits and the high cost of insuring against them.

How have socially responsible companies responded to the consumer movement?

By addressing consumer problems, improving communication, instituting arbitration procedures, recalling defective products, and pursuing voluntary codes of conduct.

What is alternative dispute resolution (ADR)?

A method to resolve disputes outside of court, often used in consumer complaints.

What is behavioral advertising?

Advertising that targets consumers based on their online behavior and preferences.

What is the role of a consumer affairs officer?

To manage consumer relations and address consumer complaints within a company.

What is deceptive advertising?

Advertising that misleads consumers regarding the nature or quality of a product.

What is product liability?

The legal responsibility of manufacturers and sellers to compensate consumers for injuries caused by defective products.

What does product quality refer to?

The standard of a product as measured against similar products or consumer expectations.

What is a product recall?

The action taken to remove a defective or unsafe product from the market.

What is strict liability?

A legal doctrine holding manufacturers and sellers liable for defects regardless of fault or negligence.