Analysis Intermediate: Weighing Management Quality

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1.
A companys board of directors represents its management.
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False. The board represents the shareholders and their interests.
2.
You can get information on the backgrounds and qualifications of the managers of companies you are interested in from the Securities and Exchange Commission.
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True. Companies include information on their managers in their shareholder statements, which are filed with the SEC.
3.
Whom does the board of directors of a company represent?
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The shareholders. The board is elected by the shareholders and technically represents them.
4.
Another term for fiduciary responsibility, according to Philip Fisher, is trusteeship.
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True. Fisher described the qualities he looks for in managers as trusteeship.
5.
In terms of financial transparency, investors should prefer companies that _______.
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Disclose the minimum information, plus useful information that helps investors understand the business. Certainly every company should disclose all the information required by the SEC and other regulators. Above and beyond that, we think investors should favor companies that are forthright about their businesses, in good times and bad, and provide information that helps investors understand operations.