Exam 11: Corporate Governance, Social Responsibility, and Ethics

The stress of not knowing for sure if the agent is acting in his or her best interests or knowing for sure if the agent is using the resources to which he or she has been entrusted as effectively and efficiently as possible is caused by the performance ambiguity between a principal and agent.

Which of the following are an example of an external stakeholder in a company?

Which of the following is NOT an accurate statement about current levels of pay for CEOs of U.S.-based firms?

The regulations instituted by the United States governmental organization known as the SEC make sure that managers do not misrepresent financial information and require that the accounts be audited by an independent, accredited accounting firm are also instituted in most other developed nations.

Which of the following is NOT an example of ways to monitor agents, evaluate their performance, and take corrective action?

Attaining future profit growth may require investments that reduce the current rate of profitability.

Describe the four types of governance mechanisms that principals use to deal with agency problems.

Which of the following is NOT a responsibility of the board of directors?

Which of the following statements is true in the context of principal-agent relationships?

Ethical dilemmas are situations where there is no agreement over exactly what the accepted principles of right and wrong are.

Matthew is a divisional manager at Venus Inc. and reports to the CEO of the company. The CEO delegates resources and authority to Matthew so that he can ensure good performance from the division. Matthew has more employees working for him than required and he has not told the CEO about this, even though there are other departments that need more employees. Which of the following concepts is illustrated here?

Which of the following statements is true in the context of financial statements and auditors?

Phil is an employee at Global Tech Inc. He is considered an external stakeholder.

Which of the following is a major function of the board of directors of a company?

Requiring an independent board of directors that is willing to hold top managers accountable for self-dealing and can verify the information managers provide is an example of which kind of ethical principle?

Which of the following statements concerning profitability and profit growth is NOT true?

Which of the following unethical behaviors violates the rights of competitors and, when government officials are involved, the right of citizens to expect that government officials will act in the best interests of the local community or nation?

Only external stakeholders, such as customers, suppliers and creditors (including banks and bondholders), have an exchange relationship with a company.

Which of the following statements is true in the context of stock-based compensation?

Which of the following is true of stakeholders?