Government > QUESTIONS & ANSWERS > Corporate Governance - Final Exam Study Guide 2022 with complete solution (All)

Corporate Governance - Final Exam Study Guide 2022 with complete solution

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Corporate Governance - Final Exam Study Guide 2022 with complete solution What is the concept of systematic risk as it relates to corporate governance regulation of financial institutions? -Answer-... Systemic risk refers to the fact that the largest financial service institutions -- if they fail -- then the entire financial system is at risk of collapse What is the concept of externality as referring to corporate social responsibility? -Answer- A cost to a third party such as society at large in the sale of a product or service of a corporation where the added cost to society was not part of that sale price. One example often given is the sale of tobacco products and the societal cost of cancer health care burdens on states health care systems. What is the definition of greenmail(see book index)? -Answer- Involves an investor rapidly acquiring a block of shares (typically more than 5%) of a company hoping that management - if a takeover is threatened - will buy the shares from the investor at a large profit What is the definition of a spinoff? -Answer- Sells parts of a corporation such as a division or subsidiary to a new group of investors who tries to improve its value by reorganizing it. What is the definition and structure of a hedge fund (see index of book)? -Answer- a hedge fund is a fund that investors put their money into. The managers of the fund select investments on behalf of the investors that the managers hope will increase in value more than the stock market as a whole. These days hedge fund managers will buy shares of firms with poor corporate governance or operations and hope to improve the value of the firm to make money for their clients. The term "hedge" comes from the physical HEDGE in a garden which is there as a kind of protection against risk. The original idea is that these funds would give an investor protection from the typical risks in the stock market, another way to make money, by using active investment managers, and thus we see the term "hedge the risk." What is the definition of privatization of a company? -Answer- The transfer of ownership, property or business from the government to the private sector is termed privatization. The government ceases to be the owner of the entity or business. The process in which a publicly-traded company is taken over by a few people is also called privatization. [Show More]

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