Corporate governance: Methods for influencing management's decisions Corporate governance refers to policies and rules,

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Corporate governance: Methods for influencingmanagement's decisions
Corporate governance refers to policies and rules, regulationsand laws, and activities that (1) influence both management’sdecisions and its company’s operations, and (2) affect therelationships between a business’s stakeholders. These stakeholdersinclude the company’s executives and managers, shareholders,creditors, current and former employees, competitors, and local andglobal communities.
In simple terms, corporate governance provisions can take twoforms: [Tomato OR Carrot OR Celery] and [Rocks OR Stones OR Sticks] , withthe former intended to provide [POSITVE orNEGATIVE] reinforcement for undertaking activitiesthat are beneficial to the firm’s stakeholders, and the latterintended to [REWARD OR PUNISH OR PROMOTE] management for its undesirable decisions or actions.
These governing forces are both internal and external to theorganization, and can either align management’s interests withthose of their shareholders (a positive outcome) or furtherentrench the firm’s management (a not-so-positive outcome). Anentrenched management is one that is [LESS ORMORE] likely to be removed, all other thingsremaining equal.
Internal and external corporate governance provisions andactivities can take many forms, including a poison pill provision.Which of the following best describes this element in afirm’s charter?
a. This provision and anti-takeover strategy attempts toincrease, rather than reduce, the number of shares that anacquiring firm must purchase to acquire its target.
b. This provision allows a target firm’s shareholders topurchase additional shares of the target firm’s common stock once ashareholder purchases a certain percentage of the firm’soutstanding shares.
c. This provision and takeover strategy allows the target firm’sshareholders to sell a given percentage of their shares to anacquiring firm for a specified percentage premium over the marketvalue of the target firm’s common shares.
If you were designing the composition and acceptable practicesfor the board of directors of a new corporation, which of thefollowing practices would you suggest beimplemented? Check all that apply.
1. The charter should require the elections of board members tobe staggered.
2. The firm’s capital structure should consist of 100% debtfinancing, because it reduces waste and the making of riskyinvestments by senior management.
3. The board of directors actively monitors the decisions andbehavior of senior management.
4. Senior management’s compensation should include cash andstock options.