Stocks Intermediate: Weighing Management Quality

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
The chief executive officer is accountable to _______.
Choose wisely. There is only one correct answer.
The board of directors. The chief executive officer is accountable to the board of directors, who, in turn, represent (and are elected by) the shareholders of the company. This is the primary reason we object to companies in which the CEO and chairman of the board are the same person--we believe it may lead to situations in which the CEO wields undue influence over the affairs of the board, which should be primarily independent and provide oversight of the CEO.
2.
In terms of financial transparency, investors should prefer companies that _______.
Choose wisely. There is only one correct answer.
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.
3.
You can get information on the backgrounds and qualifications of the managers of companies you are interested in from the Securities and Exchange Commission.
Choose wisely. There is only one correct answer.
True. Companies include information on their managers in their shareholder statements, which are filed with the SEC.
4.
Another term for fiduciary responsibility, according to Philip Fisher, is trusteeship.
Choose wisely. There is only one correct answer.
True. Fisher described the qualities he looks for in managers as trusteeship.
5.
Investors should look for companies that _______.
Choose wisely. There is only one correct answer.
Have set clear goals for measuring progress. Good measurement is good management.