c. the corporation has greatly exceeded perform-ance expectations. d.the board of directors. b. Here, I dig into the findings of rigorous, peer-reviewed studies of the relationship between board gender diversity and company performance. But, thats impossible here; we cant randomly assign board members to companies. c. public pension funds Our interviewees suggested that social diversity (e.g., gender, race/ethnicity, and age diversity) and professional diversity are both important for increasing the diversity of perspectives represented on the board. d. Individualism. Many popular press articles and fund managers make this claim, citing studies by consulting firms, information providers and financial institutions, such as McKinsey, Thomson Reuters and Credit Suisse. While its possible that the addition of women to the board causes an increase in CSR, existing research cannot prove it. c. The CEO/Chairperson of the board has been suspected of opportunistic behavior. c. increased shareholder participation in decision making. d. governmental relations. a. increases shareholder value significantly. c. the banks owing the largest shares of stock in the firm. Mr. Abercrombie is con-sidering expanding his consulting practice overseas. The apartment is hot or the air conditioner is not working , if and only if the temperature is 9090^{\circ}90. Consensus I think we all recognize the value and we all respect the diversity and the importance of diversity. Many of our interviewees suggested that their boards had made progress on gender diversity but not on other forms of social diversity such as race, nationality, and age. d. establishing and using formal processes to evaluate the board's performance. d. tying the compensation of CEOs to measurable financial criteria. c. an increased number of IPOs (initial public offerings) are expected. But are investors walking the walk on board diversity? b. c. incentives for c. Corporate governance mechanisms can be in conflict with one another. a. reasonably compensating a CEO. d.the difference in risk propensity between owners and managers. a. mandating that all outside directors be drawn from government or academia rather than industry. "Shareholder value is: c. the employees directly involved in the wrongdoing Ambrose received: b. returned to them as dividends. James Abercrombie has a thriving consulting firm specializing in training boards of directors in decision-making skills. b. This is because women bring new insights and perspectives and increase the cognitive diversity of the board. 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Why might the stock market react negatively to increases in board diversity? c. private shareholders rarely have large ownership positions in the firm. b. insuring that the strike price value of the options can be lowered if the organiza-tional environment becomes more risky. Which of the following is most likely to be TRUE? The CEO and the top executives successfully fended off the takeover and are concentrating on strategies to improve the performance of the firm. The Vorstand is elected by the firm's employees. Several members of the board of directors of American Textile Products (ATP) have proposed creating the position of lead director. a. unsubstantial profits In a study of 1,069 leading firms across 35 countries and 24 industries, we found that gender diversity relates to more productive companies, as measured by market value and revenue, only in . One interviewee discussed how this was a particularly challenging dynamic on a board that was resistant to input either from shareholders or board members: There was not a lot of open communication. However, rigorous, peer-reviewed academic research paints a different picture. Simon Leagreet, the Chairperson and CEO of L-EVA Industries, Inc., has long been the major power at L-EVA. To achieve cognitive diversity, then, we should focus on dimensions of diversity other than gender. Mr. Abercrombie has had striking success in reducing conflict and hostil-ity among directors and allowing boards to develop more cohesiveness. The research found that diversity doesnt guarantee a better performing board and firm; rather, the culture of the board is what can affect how well diverse boards perform their duties and oversee their firms. a. the firm's free cash flow. d. Large institutional investors such as pension funds, and insurance companies are relatively insignificant owners of corporate stock. At a meeting over dinner, the top management team agrees to go to the board of directors with a proposal for a. available to comment to external analysts. Nor do they perform worse. "The use of excessively-generous stock options for executive compensation has been slowed in the past couple years for all of the following reasons EXCEPT: "Archibald Smith has moved from an upper-middle management job at Chromatic Array, Inc., to a similar position with Pixilair Corporation. Innovation Research has found little to no evidence supporting the idea that companies with female board directors perform better than companies run by all-male boards. There was, however, a difference in the perceived goals of the company. a. making CEOs more accountable for their performance. a. the number of stockholders and the parties they represent. c. managers' risk of job loss, loss of compensation, and/or loss of reputation. Which of the following statements is most likely to be TRUE? a. mandating that all outside directors be drawn from government or academia rather than industry. a. banks c. agency c. having the stock option plan designed by insiders on the board of directors who are familiar with day-to-day operations of the firm. c. defense tactics are typically ineffective in deterring the takeover. d.is less expensive than maintaining two top executives. d.the top management team's interests and the owners' interests are aligned. Indeed, this is what Post and Byrons meta-analysis showed. "Product diversification provides two benefits to managers that do not accrue to shareholders: ____ and ____. 2010).These studies generally focus on institutional investors as shareholders (Roberts and Yuan 2006), and when they do address the role of . b. composed solely of outside directors. The authors conclude the following: Undoubtedly, breaking the glass ceiling matters. c. public pension funds a. defense tactics are usually beneficial for the executives of the target firm. A business journal from the Wharton School of the University of Pennsylvania. In Japan, the principal source of the active monitoring of large companies comes from Based on these findings, we worked with Mike Fucci, Chairman of the Board at Deloitte, to develop recommendations for how board chairs and directors can create more egalitarian board cultures and improve their governance. 48 This is in fact what we found. You know you might have somebody from HR on the board. a. Satyam's stock price suffered a significant decline. "In Japan, the principal source of the active monitoring of large companies comes from: a. a golden parachute. Further, there is no evidence available to suggest that the addition, or presence, of women on the board actually causes a change in company performance. "One means that is considered to improve the effectiveness of outside directors is: d.a silver handshake. "A major conflict of interest between top executives and owners, is that top executives wish to diversify the firm in order to ____, while owners wish to diversify the firm to ____. c. lower levels of product diversification. You know people listen. a. a golden parachute. In sum, the research results suggest that there is no business case for or against appointing women to corporate boards. Research: When Gender Diversity Makes Firms More Productive What circumstances would most likely have initiated this proposal? The average correlation is .15. d.has weakened the effect of other governance mechanisms. d.government agencies. Given global interest in the effects of board gender diversity and the availability of abundant data on board gender composition and firm performance, many researchers have investigated the topic. a. As a means of increasing profits, IFS has used substandard ingredients in these meals and has consistently lied about this practice during quality investiga-tions by the Marines. c. the number of outside directors and the parties they represent. b. Nor are they any less profitable, for that matter. c. the firm's top managers. b. the addition of outside directors to the board. c. pressure the board of directors to reprice their stock options. Collegial boards are more likely to accept and integrate differences of opinion. Mr. Abercrombie has had striking success in reducing conflict and hostility among directors and allowing boards to develop more cohesiveness. | Brian Berkey. What circumstances would most likely have initiated this proposal? b. free cash flows for example, one consultant observed the following: Pletzer, Nikolova, Kedzior, and Voelpel (2015), The Subtle Levers That Influence Affirmative Action, How Reshoring Will Restore the Drug Supply Chain, Climate Crisis: Who Is Responsible for the Planet? Not included in the physical count were$25,000 of goods purchased from Pelzer Corporation, f.o.b. The CEO tended to dominate the conversation. "The CEO of Skyco, a publicly-traded company that has been earning below-average returns, has been publicly criticized by shareholders for persuading the board of directors to give her interest-free loans, for having the company purchase and furnish a lavish apartment in Paris for her personal use on her twice-yearly trips there, and for excessive stock options. Researchers studied 1,644 public companies. "Several members of the board of directors of American Textile Products (ATP) have proposed creating the position of lead director. b. It is not uncommon for a firm to explicitly mention gender when they announce appointments of new board members but of course this only happens if the new board member is a woman. Ditto for studies of the gender diversity of the top management team. d.establishing and using formal processes to evaluate the board's performance. Consequently, the board has decided on an incentive plan that involves payout based on the firm's performance five years in the future. a. management structures related to total quality management systems. c. marginal profits Working in a group, discuss how the New Therapy Company can meet the deadline and still ensure a high quality of care. b. defense tactics are opposed by institutional investors. The fact that a hostile takeover has occurred is proof that the firm was un-der-performing. b. organizational size. c. Research shows that once a hostile takeover has been defeated, the firm is safe from other hostile takeover attempts for many years. Other research has found no relationship to performance at all. c. strategy implementation actions to functional managers. d.made up of CPAs with auditing experience. c. safer strategies with more focused diversifica-tion for the firm. "International Food Services (IFS) has a contract with the Marines to supply meals for it troops in Iraq and other foreign assignments. Other things being equal, market analysts may, consciously or unconsciously, regard all-male boards as more competent than boards that are more gender-diverse. The women named to corporate boards may not in fact differ very much in their values, experiences, and knowledge from the men.. a. high executive turnover. b. Consider two recent meta-analyses that have been conducted to summarize prior research on the topic. c. requiring outside directors to own significant equity stakes in the firm. b. riskier strategies with more focused diversifica-tion for the firm. c. requiring outside directors to own significant equity stakes in the firm. b. likely to gain financially if their employing firm is taken over by another. d. over-valued firms. What difference can Archibald expect? When they argue, they do it in a pretty much respectful way. d.incentive. b. the total revenue of the firm. Because meta-analyses provide a statistical summary a sophisticated averaging of the results of prior studies, their findings are much more credible than the findings of any single study. b. greater managerial autonomy. Many boards continue to recruit directors from the pool of current or former CEO/CFOs, and changing demographics within these pools do present opportunities to recruit more diverse members. 1. Women should be appointed to boards for reasons of gender equality., Women Directors and Other Dimensions of Company Performance. Boards Need To Up Their Game In Terms Of Cognitive Diversity - Forbes The two meta-analyses reached very similar conclusions, despite the differences in the underlying studies (140 studies vs. 20, etc.). Which of the following statements is most likely to be TRUE? An executive's decisions often affect firm performance only over the long run. a. installation of an outsider as the lead director on the Board of Directors. Again, we cant know for certain why board diversity doesnt predict company performance, but it seems likely that some of the following factors explain the very weak and mostly non-significant effects: While research indicates that in general male and female adults differ somewhat in their values, experiences, and knowledge (and the differences are not huge), its not clear that male and female board members differ all that much in their values, experiences, and knowledge. d. requiring that outside directors be truly objective by having no ownership interest in the firm. But when it comes to stock market performance, companies with women on the board actually see a decline in their market value for two years following the appointment. d. Banks have less influence on the governance of German corporations than they do on U.S. corporations. b. long-term firm performance is more easily manipulated by the board of directors through financial and accounting methods than are shorter-term measures of firm performance. d. of the focus on stewardship-management in German firms rather than the financial performance focus of U.S. firms. Idea diversity is also important., To offset these concerns, some boards are ensuring that skills and expertise, along with demographics, are front and center in their recruiting processes. Which of the following statements is likely to be TRUE? As ownership of the corporation is diffused, shareholders' ability to monitor managerial deci-sions d. outside directors own significant equity in the organization. b. internal auditing scrutiny has improved and there is greater trust in financial report-ing. If these dynamics occur within corporate boards, boards may not take full advantage of their own cognitive variety. See answer Advertisement sandlee09 Answer: c. Explanation: That gives you an opening to say, Oh, okay, we need to look for somebody who understands manufacturing abroad. So, as long as we are going to go look for somebody, lets use it as an opportunity to build some diversity.. Does Gender Diversity on Boards Really Boost Company Performance? Researchers interviewed 19 board directors (15 women and four men) to learn whether and how corporate boards were benefiting from diversity. In this opinion piece, Wharton management professor Katherine Klein summarizes academic research on the topic and discusses the possible reasons and implications for these surprising findings. d. banks. Research Review: Does Gender Diversity on Boards Really Boost Company Knowledge at Wharton is an affiliate of the Wharton School of the University of Pennsylvania. a. defense tactics are usually beneficial for the executives of the target firm. d.prevented by the Sarbanes-Oxley Act from owning more than 50% of the stock of any one firm. The CEO of Alta Corp. is dismayed by a lack of effort and insights his directors provide during board meetings. The argument that gender diversity on the board will improve company performance rests on the assumption that the addition of one or more women to an all-male board will increase the boards cognitive variety because women the argument goes differ from men in their values, experiences, and knowledge. Rigorous, peer-reviewed studies suggest that companies do not perform better when they have women on the board. a. safer strategies with greater diversification for the firm. b. ANS: D PTS: 1 DIF: Medium REF: 314 d. d.banks. Generally, a board member who is a source of information about a firm's day-to-day activities is classified as a(an) ____ director. b. firms earning above-average returns d. reduction in R&D expenditure. b. stock brokerage companies. a. firms with unethical top executives c. the government. In contrast to managers' desires, shareholders usually prefer that free cash flows be To test this theory, we conducted an experiment with 193 alumni and current students of a top-tier international business school. The CEO and the top executives successfully fended off the takeover and are concentrating on strategies to improve the performance of the firm. Researchers have also studied the relationship between board diversity and various board decisions and practices such as acquisitions, board monitoring and dividend payouts (Ararat, Aksu, Cetin, 2015; Chen, Crossland and Huang, 2016; Chen, Leung, & Goergen, 2017).