1.

An organization’s appropriate tone at the top promoting ethical conduct is an example

of:
a. Ethics sensitivity.
b. Ethics incentives.
c. Ethical behavior
d. Consequentialist.
2. One of the objectives of the Sarbanes-Oxley Act was to:
a. Increase the cost of compliance with federal regulations.
b. Force foreign companies to delist from U.S. capital market exchanges.
c. Improve the quality and transparency of financial reporting.
d. Increase the compliance burden for small companies.
3. Under the _____________, both internal and external corporate governance
mechanisms are intended to induce managerial actions that maximize profit and
shareholder value.
a. Shareholder theory.
b. Agency theory.
c. Stakeholder theory.
d. Corporate governance theory.
4. The internal audit function is least effective when the department:
a. Is non-independent.
b. Is competent.
c. Is objective.
d. Exhibits integrity
5. The corporate governance structure of a company reflects the individual companies’:
a. Cultural and economic system.
b. Legal and business system.
c. Social and regulatory system.
d. All of the above.
6. The goal of corporate governance and business ethics education is to:
a. Teach students their professional accountability and to uphold their personal
Integrity to society.
b. Change the way in which ethics is taught to students.
c. Create more ethics standards by which corporate professionals must operate.
d. Increase the workload for accounting students.
7. The primary stakeholders are:
a. Customers.
b. Suppliers.
c. Shareholders.
d. Creditors.
8. An independent director is one who:
a. Did not attend a school supported by the company.
b. Does not have outside relationships with other directors.
c. Does not have any other relationships with the company other than his or her
directorship.
d. All of the above.
9. The chairperson of the board of directors and CEO should be leaders with:
 a. Vision and problem solving skills.
b. The ability to motivate.
c. Business acumen.
d. All of the above.
10. A board that is elected in a classified system is known as a:
a. Diversified board.
b. Staggered board.
c. Rotating board.
d. Declassified board.
11. Are all listed companies in the UK required to comply with the principles found in the
UK Corporate Governance Code?
a. Yes
b. No
12. Which ONE of the following would not be described as an institutional investor?
a. Banks
b. Pension funds
c. Insurance companies
d. Employees holding shares through an employee share scheme
13. What is meant by the 'separation of ownership and control?
a. That the owners of companies have become separated from those who control
companies.
b. That the law should seek to keep the owners and controllers of company apart
in order to avoid an over-concentration of power.
c. That owners and controllers of companies should not act in concert to defeat
resolutions.
d. That those who control the company should be separate to those who own it.
14. As a matter of law, are directors generally entitled to be paid for their services?
a. Yes
b. No
15. Which ONE of the following statements is untrue?
a. Companies should set up a remuneration committee consisting of independent
non-executive directors.
b. The remuneration of the non-executive directors should be determined by the
executives.
c. The model articles provide that directors should not be permitted to determine
their own levels of remuneration.
d. Remuneration committees should consist of at least three directors, although
in smaller companies, this may be reduced to two.
16. Which ONE of the following is not a valid difference between executive and non-
executive directors?
a. Executive directors work full-time, whereas non-executive directors work
part-time.
b. Executive directors tend to be paid considerably more than non-executive
directors.
c. Executive directors are involved in the management of the company, whereas
non-executive directors are not expected to be involved in management.
d. Non-executive directors should be independent, whereas the executives will
usually not be.