Corporate Governance Corporate Governance 3

Question 1

Under SEC rules, which event requires an 8-K filing within four business days?

Accepted Answer

A material definitive agreement or change in executive leadership

Answer

SEC Form 8-K must be filed within four business days of material events such as material agreements, leadership changes, or bankruptcy filings.

Question 2

The 'stakeholder theory' of corporate governance, as opposed to 'shareholder primacy,' holds that corporations should:

Accepted Answer

Consider the interests of employees, customers, communities, and shareholders

Answer

Stakeholder theory argues that corporations owe duties to a broad set of constituencies—not just shareholders—including employees, customers, suppliers, and communities.

Question 3

A 'clawback provision' in executive compensation agreements allows the company to:

Accepted Answer

Recover previously paid compensation following a restatement or misconduct

Answer

Clawback provisions require executives to return previously paid incentive compensation if financial statements are restated or misconduct is discovered.

Question 4

In U.S. corporate law, which state's law governs a corporation's internal affairs regardless of where it operates?

Accepted Answer

The state of incorporation

Answer

Under the internal affairs doctrine, a corporation's governance is governed by the laws of the state in which it is incorporated, most commonly Delaware.

Question 5

Which of the following is an example of a 'related-party transaction' that requires board or audit committee approval?

Accepted Answer

Hiring a CEO's family member's consulting firm for services

Answer

Related-party transactions involve dealings between the company and parties with a pre-existing relationship (such as executives, directors, or their affiliates) and require independent oversight.

Corporate Governance Practice Test

Corporate Governance Practice Test

Corporate Governance Corporate Governance 3