Corporate governance and control

Corporate governance is the process by which a firm is run and controlled by its managers and board of directors. Typically, the firm's board of directors is responsible for ensuring the firm is acting in the best interest of its shareholders; however, there are instances when outside agencies need to step in to make sure shareholders aren't being misled by the firm.

In $2002,$ the SEC imposed new rules to prevent conflicts of interest between which two groups?

Analysts and shareholders

Analysts and the firm that employs them

Analysts and the SEC

Analysts and firms they are analyzing

True or False: A firm functioning inefficiently might be targeted in an acquisition to provide synergistic benefits to the acquiring firm.

True

False

Corporate governance is designed to protect shareholders and allow poor management to be replaced; however, there can be barriers to this mechanism that protect existing management and make changes of control harder. Some of these may be contained in the corporate charter $($making them hard to change$).$ These provisions can take many forms, including a golden parachute provision.

Which of the following best describes this element in a firm's charter?

This provision requires approval from at least two$-$thirds of the voting shareholders before the firm can be acquired.

This provision prevents the original owners of a firm from selling their shares for a certain amount of time.

This provision allows a firm's shareholders to purchase additional shares of the firm's stock once a potential acquirer purchases a certain percentage of the firm's outstanding shares.

This provision grants compensation to employees at the management level in the event that they are let go or the firm is acquired.