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Shares/Sustain
Shareholders/Sustainability, Bus Gov and Soc MGMT 320
| Question | Answer |
|---|---|
| What two ideas does 'corporate governance' encompass? | Providing reasonable protections to shareholders AND organizing the rights and responsibilities of those who own and manage the corporation. |
| For all C-corps, both the BOD and management own a ___________ duty to shareholders (corp. governance right) | Fiduciary. |
| Why are audits conducted from a shareholder perspective? | To provide reasonable assurance that the BOD and management are honoring their FIDUCIARY obligations to accurately report to shareholders. |
| What financial crisis prompted the creation of the SEC? | The great depression. |
| The SEC has the power to bring civil (non-criminal) lawsuits against corporations AND corporate officers if they either: | 1) makes materially untrue or misleading statements to shareholders directly 2) Engage in insider trading |
| What is a shareholder derivative suit? | a lawsuit filed by a shareholder on behalf of the corporation against directors, officers, or third parties who have harmed the corporation by breaching their duties. Any recovery goes to the corporation; shareholders may recover litigation costs. |
| What is the main substance of the Sarbanes Oxley Act of 2002? (SOX) | 1) Imposes accounting standards 2) Holds management responsible for reporting accuracy 3) claw back provision 4) Strengthens board audit committees & whistleblowers 5) Establishes criminal penalties 6) Firms cannot audit and consult for the same firm |
| What is a "claw back" provision? Example in SOX? | A take-back of cash. in SOX, executives must surrender profits from the sale of stocks and bonuses affected by exaggerated profits. |
| What was the 'Dodd-Frank Wall Street Reform and Consumer Protection Act' enacted for? | It was enacted in 2010 to improve financial regulation following the 2008 financial crisis. It aimed to increase accountability and transparency in the financial system, protect consumers, and reduce risks in the banking sector. |
| What three tools does the government and shareholders have to coerce the BOD and managers to act responsibility? | 1) The US Sentencing Reform Act 2) Shareholder lawsuits 3) Securities law |
| What are the facets of Federal Sentencing Guidelines? | 1) demonstrate that a reasonable compliance plan was in place prior to misconduct 2) Voluntarily & timely disclose misconduct to the government when it is internally discovered 3) co-oporate identifying specific individuals who engaged in misconduct |
| What is a compliance plan? | ~Internal controls. They should: 1) prevent corporate misconduct 2) when it is not prevented, discover and fix it. ~The government will reduce fines if they prove they had compliance plans in place. |
| Was Boeing's fine reduced because it self-reported to the government? (2019 737-MAX MCAS issues) | No, they did not timely and voluntarily disclose to the Fraud Section. |
| What employee was primarily responsible for Boeing's 737 MAX MCAS scandal? | Mark Forkner, a chief technical pilot |
| What does 105-b say about lawsuits? | Civil ($ damage) lawsuits brought by injuries parties and/or the government, AND CRIMINAL actions brought by US Justice Department. |
| Student Experts: Greenwashing? What's a Green Guide? | |
| What are the two aspects of sustainable development? | The current benefits (and costs) from the use of natural resources across: 1) various countries 2) generations |
| What is the 'global commons'? | The idea that the earth, oceans, and atmosphere are shared resources that all the worlds' populations use collectively. |
| What are the four facets of Dodd-Frank? | 1) Say on Pay 2) Consumer Financial Protection Bureau 3) Disclosure of CEO and top leadership's pay and pay relationship with median employee. 4) Claw-backs |
| What is 'Say on Pay'? | a firm's shareholders have the right to vote on the remuneration of executives. It is non-binding, once every 3 years for large corporations, and a portion of Dodd-Frank. |
| What is the tragedy of the commons? | If everyone maximizes their own private advantages in the short term, the commons will be destroyed, and all users, present and future, will lose. |
| What is the only solution to the tragedy of the commons? | Restraint. |
| 23 rich countries account for 12% of the population but contribute 50% to historical CO2. How much does the U.S. contribute? | Of these rich countries, HALF of all historical CO2 emissions. |
| Per Capita CO2 emissions? | |
| How many people died in the 2021 "heat dome" heat wave? | 21 people died. |
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Suzilla