Test Bank for Strategic Management and Business Policy Globalization, Innovation and Sustainability, 15th edition By Thomas L. Wheelen, J. David Hunger, Alan N. Hoffman, Charles E. Bamford 2025

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Test Bank for Strategic Management and Business Policy

Globalization, Innovation and Sustainability, 15th edition

By Thomas L. Wheelen, J. David Hunger, Alan N.

Hoffman, Charles E. Bamford 2025

Strategic Management and Business Policy, 15e (Wheelen et al.) Chapter
2 Corporate Governance

1) From the perspective of the public, the primary job of the board of directors is A)
to lend credence to the decisions of the executive committee.
B) dictated solely by legal requirements.
C) to act as representatives for public identification.
D) to closely monitor the actions of management.
E) insulated from legal judgments because management actually makes the decisions. Answer:
D
Difficulty: Moderate
Learning Obj.: 2.1: Describe the role and responsibilities of the board of directors in corporate
governance
AACSB: Analytical thinking

2) The relationship among the board of directors, top management, and shareholders is referred
to as
A) corporate synergy.
B) corporate management.
C) corporate governance.
D) corporate strategy.
E) corporate responsibility.
Answer: C
Difficulty: Moderate
Learning Obj.: 2.1: Describe the role and responsibilities of the board of directors in corporate
governance
AACSB: Application of knowledge

3) The requirements of a board of directors vary significantly by country and by state; however,
there is a developing consensus as to what the major responsibilities should be. Which of the
following is not one of the responsibilities?
A) effective board leadership including the processes, makeup and output of the board
B) strategy of the organization
C) risk vs. initiative and the overall risk profile of the organization
D) becoming directly involved in managerial decisions
E) sustainability
Answer: D
Difficulty: Difficult
Learning Obj.: 2.1: Describe the role and responsibilities of the board of directors in corporate
governance

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AACSB: Analytical thinking




1

4) Which of the following statements is not true regarding the board of directors? A)
The board is charged by law to act with due care.
B) If a director or the board as a whole fails to act with due care and, as a result, the
corporation is in some way harmed, the careless director or directors can be held personally
liable for the harm done.
C) Director liability insurance is often needed to attract people to become members of
boards. D) Directors must be aware of the needs of various constituent groups to balance all their
interests.
E) More than half of all publicly traded companies in the United States are incorporated in New
York, requiring that the corporation be managed in accordance with NY state laws.
Answer: E
Difficulty: Moderate
Learning Obj.: 2.1: Describe the role and responsibilities of the board of directors in corporate
governance
AACSB: Analytical thinking

5) More than ________ of outside directors surveyed said that they had been named as part of a
lawsuit against the corporation.
A) 40%
B) 50%
C) 60%
D) 70%
E) 80%
Answer: A
Difficulty: Difficult
Learning Obj.: 2.1: Describe the role and responsibilities of the board of directors in corporate
governance
AACSB: Application of knowledge

6) A careless director or directors can be held personally liable for harm done to the corporation
if they failed to act with A) codetermination.
B) figurehead role.
C) cumulative voting.
D) accountability.
E) due care.
Answer: E
Difficulty: Moderate
Learning Obj.: 2.1: Describe the role and responsibilities of the board of directors in corporate
governance
AACSB: Application of knowledge

7) Which of the following is not a task of the board of directors in strategic management? A)
to monitor

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B) to implement
C) to influence
D) to initiate and determine
E) to evaluate
Answer: B
Difficulty: Easy
Learning Obj.: 2.1: Describe the role and responsibilities of the board of directors in corporate
governance
AACSB: Application of knowledge

8) Catalyst-level boards of directors typically
A) are less involved than active participation boards.
B) take leading roles in establishing and modifying the company mission, objectives, and
strategy.
C) are involved in a limited degree of key decision-making.
D) are held to a greater degree of legal responsibility.
E) experience more financial success than less involved boards.
Answer: B
Difficulty: Moderate
Learning Obj.: 2.1: Describe the role and responsibilities of the board of directors in corporate
governance
AACSB: Analytical thinking

9) A highly involved board does all of the following EXCEPT A)
tends to be very active.
B) provides advice when necessary.
C) keeps management alert.
D) takes their tasks of initiating and determining strategy very seriously.
E) manage the everyday operations of the organization.
Answer: E
Difficulty: Moderate
Learning Obj.: 2.1: Describe the role and responsibilities of the board of directors in corporate
governance
AACSB: Analytical thinking

10) The ________ boards typically never initiate or determine strategy unless a crisis occurs.
A) rubber stamp
B) active participation
C) catalyst
D) nominal participation
E) minimal review
Answer: A
Difficulty: Easy
Learning Obj.: 2.1: Describe the role and responsibilities of the board of directors in corporate
governance
AACSB: Application of knowledge

11) According to the text, most publicly owned large corporations today tend to have boards with
what degree of involvement in the strategic management process?
A) passive to minimal
B) minimal to nominal
C) rubber stamp type
D) nominal to active