CBS Corporate Governance & Ethics Flashcards

A conflict of interest in corporate governance arises when:

Answer: A director's personal interests could compromise their duty to the company

A conflict of interest occurs when a director's personal, financial, or professional interests could bias their decision-making at the expense of the company.

Say-on-pay policies in U.S. corporate governance give shareholders the right to:

Answer: Vote on executive compensation packages (advisory)

Say-on-pay gives shareholders a non-binding advisory vote on executive compensation, increasing accountability for pay decisions.

Which governance practice ensures that no single individual has control over all key financial decisions?

Answer: Separation of duties

Separation of duties divides critical financial tasks among multiple people to prevent errors, fraud, and abuse of power.

Stakeholder theory, as opposed to shareholder theory, argues that corporations should:

Answer: Balance the interests of employees, customers, communities, and shareholders

Stakeholder theory holds that businesses create long-term value by considering and balancing the needs of all parties affected by their operations.

An ethics hotline (helpline) in a corporation is primarily used to:

Answer: Allow anonymous reporting of potential ethical violations

An ethics hotline provides a confidential channel for employees to report suspected misconduct or ethical violations anonymously.

Which governance body is directly elected by shareholders and is responsible for hiring and overseeing the CEO?

Answer: Board of Directors

The Board of Directors, elected by shareholders, holds ultimate accountability for corporate governance including hiring, evaluating, and if necessary replacing the CEO.