Chapt 1

Question 1

is an organization that uses economic resources or inputs to provide goods or services to customers in exchange for money or other goods and services

Answer 1

Business

Question 2

also known as single proprietorship, is a business owned by only one person who has complete control and authority of its own.

Answer 2

Sole proprietorship

Question 3

is a business owned by two or more persons who bind themselves to contribute money or industry to a common fund with the intention of dividing the profits between themselves.

Answer 3

Partnership

Question 4

is a business organization that has a separate legal personality from its owners.

Answer 4

Corporation

Question 5

is a duly registered business organization owned by a group of individuals and is operated for their mutual benefit.

Answer 5

Cooperative

Question 6

“A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence.”

Answer 6

CORPORATION CODE OF THE PHIL., SEC. 2

Question 7

a juridical person whose personality is separate and distinct from its owners.

Answer 7

Artificial being

Question 8

existence through a charter or a grant from the state.

Answer 8

Created by operation of law

Question 9

can continue to exist even in death, incapacity or insolvency of any stockholder or members

Answer 9

Right of succession

Question 10

it is authorized to do activities within the purpose(s) of its creation, it has its own traits, and it operates based on what has been expressed provided in the charter including those that are considered incident to its existence as a corporation.

Answer 10

Powers, attributes and properties

Question 11

STAKEHOLDERS OF A CORPORATION

Answer 11

• Management
• Creditors
• Shareholders or stockholders
• Employees
• Clients
• Government
• Public

Question 12

PURPOSES OF A CORPORATION

Answer 12

• Early stage survival
• To increase profit
• To offer vital services to the general public
• To offer goods and services to the mass market

Question 13

artificial or natural persons that are legally owners of the corporation

Answer 13

Shareholders

Question 14

persons or entities that are holders of currently outstanding bond

Answer 14

Bondholders

Question 15

the collegial body that exercises the corporate powers of all corporations formed under the Corporation Code

Answer 15

Board of Directors (BOD)

Question 16

Duties of the BOD

Answer 16

See slide 11

Question 17

have investment in other countries, but do not have coordinated products offerings in each. They are more focused on adapting their products and services to each individual local market.

Answer 17

Multinational Companies

Question 18

operate in more than one country and have a centralized management system.

Answer 18

Multinational companies

Question 19

have many companies around the world but do not have a centralized management system.

Answer 19

Transnational companies

Question 20

enterprises which own or control production or service facilities outside the country in which they are based. They have a central corporate facility but give decision-making, R&D, and marketing powers to each individual foreign subsidiary.

Answer 20

Transnational corporations (TNC)

Question 21

means the process of decision-making and the process by which decisions are implemented (or not implemented)

Answer 21

Governance

Question 22

is the process by which corporations establish their rules and policies and implement and monitor them.

Answer 22

Governance

Question 23

is the process and structure used to direct and manage the business and affairs of the company towards enhancing business prosperity and corporate accountability with the ultimate objective of realizing long-term shareholder value, whilst taking into account the interests of other stakeholders

Answer 23

Corporate Governance

Question 24

Corporate governance, in principles, refers to ____________________

Answer 24

the joint responsibility imposed on the BOD and management to protect shareholder rights and enhance shareholder value

Question 25

refers to the system whereby shareholders, creditors and other stakeholders of a corporation ensure that management enhances the value of the corporation as it competes in an increasingly global market place

Answer 25

Corporate Governance

Question 26

is concerned with holding the balance between economic and social goals and between individual and communal goals

Answer 26

Corporate Governance

Question 27

FUNDAMENTAL OBJECTIVES OF CORPORATE GOVERNANCE

Answer 27

- Improvement of shareholder value - Conscious consideration of the interest of other stakeholders

Question 28

has a variety of important characteristics, and it can mean different things to different people. Groups and individuals that hold positions of power must have a sense of accountability and a mode of checks and balances if they want to govern successfully.

Answer 28

Good Governance

Question 29

As it relates to corporations, _________________ typically leads corporations to achieve their goals. In successfully fulfilling their mission and plans, corporations that embrace good corporate principles will enhance the company’s prosperity and find favor in the eyes of their shareholders.

Answer 29

Good governance

Question 30

refers to the welfare in governance and improving the quality of governance.  It enables the government to provide equal opportunities and fair delivery of goods and services to the people who are most marginal in society. 

Answer 30

Good Governance

Question 31

refers to mobilizing the people of a country in the best direction possible. It requires the unity of people in society and motivates them to attain political objectivity. In other words; it ensures proper utilization of all the resources of the state for its citizens which ensures sustainable development.

Answer 31

Good Governance

Question 32

NINE MAJOR CHARACTERISTICS of good governance

Answer 32

See slide 19

Question 33

IMPORTANCE OF GOOD GOVERNANCE IN A STATE

Answer 33

- Economic development - Social development - Political development

Question 34

WHY IS GOOD GOVERNANCE IMPORTANT?

Answer 34

- To preserve and strengthen stakeholders confidence. - To provide the foundation for a high performing organization - To ensure the organization is well placed to respond to a changing external environment.

Question 35

BENEFITS OF GOOD GOVERNANCE

Answer 35

- Reduced vulnerability - Marketability - Credibility - Valuation

Question 36

is the connection between owners and managers.

Answer 36

Agency relationship

Question 37

the conflict in agency relationship

Answer 37

principal-agent problem

Question 38

The shareholders are the _____________

Answer 38

principals

Question 39

The ___________________ are the agents

Answer 39

managers

Question 40

refers to the costs of the conflict of interest between stockholders and management.

Answer 40

Agency cost

Question 41

corporate expenditure that benefits management but costs the stockholders or expense that arise from the need to monitor management actions.

Answer 41

Direct agency costs

Question 42

is a lost opportunity

Answer 42

indirect agency cost

Question 43

suggests that the firm can be viewed as loosely defined contract between resource providers and the resource controllers.

Answer 43

Agency theory

Question 44

argues that in the modern corporation, managerial actions sometimes depart from those required to maximize shareholder returns.

Answer 44

Agency theory

Question 45

the benefits that could have accrued to the owners had the owners been the ones who exercised direct control of the corporation.

Answer 45

Agency Loss

Question 46

is the harmony and alignment of goals of both the principal and the agent which is consistent with the overall objectives of the organizations.

Answer 46

Goal Congruence

Question 47

does not take part in the executive function of the management team, not an employee of the company or connected with it in another way.

Answer 47

Non-executive directors

Question 48

ROLES OF NON-EXECUTIVE DIRECTORS

Answer 48

- Developing strategy - Establishing networks - Monitoring of performance - Audit

Question 49

is a corporate officer principally accountable for managing the financial risks of the corporation.

Answer 49

Chief Financial officer (CFO)

Question 50

is an essential component in the overall corporate governance system. They should be independent from the operational aspects of the company

Answer 50

Audit Committee

Question 51

is a systematic process by which a competent, independent person objectively obtains and evaluates evidence regarding assertions about economic actions and events

Answer 51

Auditing