What recommendations would you make to improve corporate governance?
What will be an ideal response?
The answer to this question is not provided in the text. Some likely suggestions are the following:
• Add more outsiders (people not affiliated with the corporation) to the board of directors. Keep the percentage of insiders (typically top management) to about 25% or less of board membership.
• Separate the positions of CEO and Chairman so that top management cannot unduly influence the board's meetings and agenda. This should improve the board's ability to properly evaluate top management.
• Use a committee composed of outsiders to nominate potential new directors. This will help to ensure that potential members are not friends of top management who may owe more allegiance to the CEO than to the shareholders.
• Nominate to the board those who have knowledge valuable to the board and who have expertise of value to top management. These should be people who will have the respect of top management and who can both advise and criticize top management as needed.
• Require board members to own substantial amounts of stock in the corporation to ensure that they have a personal as well as professional stake in the welfare of the corporation.
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Which of the following statements is incorrect?
a. The normal balance of accounts receivable is a debit. b. The normal balance of owner's withdrawals is a debit. c. The normal balance of unearned revenues is a credit. d. The normal balance of an expense account is a credit. e. The normal balance of the owner's capital account is a credit.
When denying a customer claim, what should the goal of the communication be?
A) To say "no" in clear terms B) To explain how the customer is at fault C) To encourage the sale of a more expensive item D) To maintain goodwill E) To use clear and concise language