Question 1

A criticism of stock-based compensation plans is that:

Accepted Answer

A) they discourage empire building. 
B) they reduce motivation among agents. 
C) they do not align management and stockholder interests 
D) they dilute stockholders' equity. 
E) they adversely affect the earnings of principals. 
A) they discourage empire building. 
B) they reduce motivation among agents. 
C) they do not align management and stockholder interests 
D) they dilute stockholders' equity. 
E) they adversely affect the earnings of principals.

Question 2

Gemini Corp.is a large automobile manufacturer that has contracts with several suppliers.To gain more benefits from an upholstery supplier,Gemini Corp.unilaterally changed the contract and pressurized the supplier to lower its prices.Which of the following concepts is illustrated in this scenario?

Accepted Answer

A) Opportunistic exploitation 
B) On-the-job consumption 
C) Agency strategy 
D) Greenmail 
E) Self-dealing 
A) Opportunistic exploitation 
B) On-the-job consumption 
C) Agency strategy 
D) Greenmail 
E) Self-dealing

Question 3

Financial statements can be a tool of effective governance only if they provide consistent,detailed,and accurate information.

Accepted Answer

A) True 
 B)False

Question 4

_____ are external stakeholders in a company.

Accepted Answer

A) Stockholders 
B) Managers 
C) Employees 
D) Customers 
E) Board members 
A) Stockholders 
B) Managers 
C) Employees 
D) Customers 
E) Board members

Question 5

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

Accepted Answer

A) The agency relationship is confined to the top management and does not continue down the hierarchy within the company. 
B) Agents almost always have more information about the resources they are managing than the principal does. 
C) Information asymmetry can make it easier for principals to measure how well an agent is performing. 
D) In a principal-agent relationship, the decision making power rests entirely with the principals. 
E) The relationship between the company and the suppliers is an example of a principal-agent relationship. 
A) The agency relationship is confined to the top management and does not continue down the hierarchy within the company. 
B) Agents almost always have more information about the resources they are managing than the principal does. 
C) Information asymmetry can make it easier for principals to measure how well an agent is performing. 
D) In a principal-agent relationship, the decision making power rests entirely with the principals. 
E) The relationship between the company and the suppliers is an example of a principal-agent relationship.

Question 6

Alpha LLC is a large paint manufacturing company.Despite government regulations,the company has been illegally disposing of its chemical wastes in a lake,which is an important habitat for several fish and birds.Which of the following ethical concerns is illustrated in this scenario?

Accepted Answer

A) On-the-job consumption 
B) Opportunistic exploitation 
C) Environmental degradation 
D) Self-dealing 
E) Substandard working conditions 
A) On-the-job consumption 
B) Opportunistic exploitation 
C) Environmental degradation 
D) Self-dealing 
E) Substandard working conditions

Question 7

Strategic control systems are the primary governance mechanisms established within a company to reduce the scope of the agency problem between levels of management.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements is true about the Board of Directors?

Accepted Answer

A) The Board members are directly elected by the employees of the company. 
B) The Board has no legal authority to hire, fire, and compensate the CEO. 
C) Some of the Board members hold positions on the boards of several companies. 
D) The Board has no power to nominate people for positions in management. 
E) Divisional and functional managers usually form the Board. 
A) The Board members are directly elected by the employees of the company. 
B) The Board has no legal authority to hire, fire, and compensate the CEO. 
C) Some of the Board members hold positions on the boards of several companies. 
D) The Board has no power to nominate people for positions in management. 
E) Divisional and functional managers usually form the Board.

Question 9

While many agency relationships work well,problems arise when agents and principals have different goals.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements concerning stock-based compensation schemes for executives is NOT true?

Accepted Answer

A) Under accounting regulations that were enforced until 2005, stock options, like wages and salaries, were expensed. 
B) Huge stock-option grants can align the interests of management and stockholders. 
C) Stock-based compensation schemes can dilute the equity of stockholders. 
D) Huge stock-option grants increase the outstanding number of shares in a company. 
E) Top managers can earn huge bonuses from stock options that were granted several years prior. 
A) Under accounting regulations that were enforced until 2005, stock options, like wages and salaries, were expensed. 
B) Huge stock-option grants can align the interests of management and stockholders. 
C) Stock-based compensation schemes can dilute the equity of stockholders. 
D) Huge stock-option grants increase the outstanding number of shares in a company. 
E) Top managers can earn huge bonuses from stock options that were granted several years prior.

Question 11

Venus LLC is a large monopolistic electronic firm.The firm has been putting a lot of pressure on some of the complementor companies,asking them to bundle their products along with the products made by Venus LLC,which will make it mandatory for customers to buy Venus LLC products along with the complementary products,even if they are unrelated.In this scenario,Which of the following does Venus LLC's actions demonstrate?

Accepted Answer

A) Agency strategy 
B) Dumping strategy 
C) Price limiting 
D) Anticompetitive behavior 
E) On-the-job consumption 
A) Agency strategy 
B) Dumping strategy 
C) Price limiting 
D) Anticompetitive behavior 
E) On-the-job consumption

Question 12

The purpose of governance mechanisms in corporations is to:

Accepted Answer

A) centralize company resources to the top management. 
B) reduce the scope and frequency of the agency problems. 
C) satisfy the requirements of the Securities and Exchange Commission (SE
C) . 
D) limit corporate growth to manageable rates. 
E) monitor the performance of the Board of Directors. 
A) centralize company resources to the top management. 
B) reduce the scope and frequency of the agency problems. 
C) satisfy the requirements of the Securities and Exchange Commission (SE
C) . 
D) limit corporate growth to manageable rates. 
E) monitor the performance of the Board of Directors.

Question 13

Which of the following is NOT a responsibility of the Board of Directors?

Accepted Answer

A) Monitor corporate strategy decisions and ensure that they are consistent with stockholder interests 
B) Apply sanctions on management when appropriate 
C) Hire, fire, and compensate the CEO 
D) Develop targets for divisional managers 
E) Make sure the audited financial statements present a true picture of the company's financial situation 
A) Monitor corporate strategy decisions and ensure that they are consistent with stockholder interests 
B) Apply sanctions on management when appropriate 
C) Hire, fire, and compensate the CEO 
D) Develop targets for divisional managers 
E) Make sure the audited financial statements present a true picture of the company's financial situation

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

If a company fails to take stakeholder claims into account,stakeholders may withdraw their support.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is true of stakeholders?

Accepted Answer

A) Creditors are examples of internal stakeholders. 
B) Stakeholders do not engage in an exchange relationship with their company. 
C) Stockholders are internal stakeholders that provide an enterprise with risk capital. 
D) The goals of different stakeholder groups within a company are the same, and therefore do not lead to any conflicts. 
E) It is mandatory for a company to satisfy the claims of all stakeholders. 
A) Creditors are examples of internal stakeholders. 
B) Stakeholders do not engage in an exchange relationship with their company. 
C) Stockholders are internal stakeholders that provide an enterprise with risk capital. 
D) The goals of different stakeholder groups within a company are the same, and therefore do not lead to any conflicts. 
E) It is mandatory for a company to satisfy the claims of all stakeholders.

Question 17

In corporations,agency theory is used to explain the relationship between stockholders and corporate managers,and between upper-level managers and the lower-level managers they supervise.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) Attaining future profit growth may require investments that reduce the current rate of profitability. 
B) Managers must find the right balance between profitability and profit growth. 
C) Too much emphasis on current profitability at the expense of profit growth can make an enterprise less attractive to shareholders. 
D) Satisfying the claims of other key stakeholder groups happens at the risk of decreased profitability and profit growth. 
E) Too much emphasis on profit growth can reduce profitability and make an enterprise less attractive to shareholders. 
A) Attaining future profit growth may require investments that reduce the current rate of profitability. 
B) Managers must find the right balance between profitability and profit growth. 
C) Too much emphasis on current profitability at the expense of profit growth can make an enterprise less attractive to shareholders. 
D) Satisfying the claims of other key stakeholder groups happens at the risk of decreased profitability and profit growth. 
E) Too much emphasis on profit growth can reduce profitability and make an enterprise less attractive to shareholders.

Question 19

Which of the following statements is true about corporate raiders?

Accepted Answer

A) They are underperforming corporations that have been acquired by other companies. 
B) They are government-funded organizations that help underperforming companies recover. 
C) They may purchase stock in a company to take over the business and run it more efficiently. 
D) They lack power to interfere with the top management decisions. 
E) They discourage companies from pursuing strategies that help maximize stockholder wealth. 
A) They are underperforming corporations that have been acquired by other companies. 
B) They are government-funded organizations that help underperforming companies recover. 
C) They may purchase stock in a company to take over the business and run it more efficiently. 
D) They lack power to interfere with the top management decisions. 
E) They discourage companies from pursuing strategies that help maximize stockholder wealth.

Question 20

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

Accepted Answer

A) Stock options usually result in information asymmetry. 
B) Stock-based compensation schemes for executives can align management and stockholder interests. 
C) A particular cause for concern is that stock options are often granted at extremely high strike prices. 
D) Critics deny that stock-based compensations motivate managers to improve company performance. 
E) Granting more stock options often results in an increase in stockholder equity. 
A) Stock options usually result in information asymmetry. 
B) Stock-based compensation schemes for executives can align management and stockholder interests. 
C) A particular cause for concern is that stock options are often granted at extremely high strike prices. 
D) Critics deny that stock-based compensations motivate managers to improve company performance. 
E) Granting more stock options often results in an increase in stockholder equity.

A criticism of stock-based compensation plans is that:

Gemini Corp.is a large automobile manufacturer that has contracts with several suppliers.To gain more benefits from an upholstery supplier,Gemini Corp.unilaterally changed the contract and pressurized the supplier to lower its prices.Which of the following concepts is illustrated in this scenario?

Financial statements can be a tool of effective governance only if they provide consistent,detailed,and accurate information.

_____ are external stakeholders in a company.

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

Alpha LLC is a large paint manufacturing company.Despite government regulations,the company has been illegally disposing of its chemical wastes in a lake,which is an important habitat for several fish and birds.Which of the following ethical concerns is illustrated in this scenario?

Strategic control systems are the primary governance mechanisms established within a company to reduce the scope of the agency problem between levels of management.

Which of the following statements is true about the Board of Directors?

While many agency relationships work well,problems arise when agents and principals have different goals.

Which of the following statements concerning stock-based compensation schemes for executives is NOT true?

The purpose of governance mechanisms in corporations is to:

Which of the following is NOT a responsibility of the Board of Directors?

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

If a company fails to take stakeholder claims into account,stakeholders may withdraw their support.

Which of the following is true of stakeholders?

In corporations,agency theory is used to explain the relationship between stockholders and corporate managers,and between upper-level managers and the lower-level managers they supervise.

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

Which of the following statements is true about corporate raiders?

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

Strategic Leadership: Managing the Strategy Making Process for Competitive Advantage

External Analysis: The Identification of Opportunities and Threats

Internal Analysis: Resources and Competitive Advantage

Building Competitive Advantage Through Functional Level Strategies

Business Level Strategy

Business Level Strategy and the Industry Environment

Strategy and Technology

Strategy in the Global Environment

Corporate-Level Strategy: Horizontal Integration, Vertical Integration, and Strategic Outsourcing

Corporate Level Strategy: Related and Unrelated Diversification

Implementing Strategy Through Organization

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Exam 11: Corporate Performance, Governance, and Business Ethics

A criticism of stock-based compensation plans is that:

Gemini Corp.is a large automobile manufacturer that has contracts with several suppliers.To gain more benefits from an upholstery supplier,Gemini Corp.unilaterally changed the contract and pressurized the supplier to lower its prices.Which of the following concepts is illustrated in this scenario?

Financial statements can be a tool of effective governance only if they provide consistent,detailed,and accurate information.

_____ are external stakeholders in a company.

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

Alpha LLC is a large paint manufacturing company.Despite government regulations,the company has been illegally disposing of its chemical wastes in a lake,which is an important habitat for several fish and birds.Which of the following ethical concerns is illustrated in this scenario?

Strategic control systems are the primary governance mechanisms established within a company to reduce the scope of the agency problem between levels of management.

Which of the following statements is true about the Board of Directors?

While many agency relationships work well,problems arise when agents and principals have different goals.

Which of the following statements concerning stock-based compensation schemes for executives is NOT true?

The purpose of governance mechanisms in corporations is to:

Which of the following is NOT a responsibility of the Board of Directors?

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

If a company fails to take stakeholder claims into account,stakeholders may withdraw their support.

Which of the following is true of stakeholders?

In corporations,agency theory is used to explain the relationship between stockholders and corporate managers,and between upper-level managers and the lower-level managers they supervise.

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

Which of the following statements is true about corporate raiders?

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

Strategic Leadership: Managing the Strategy Making Process for Competitive Advantage

External Analysis: The Identification of Opportunities and Threats

Internal Analysis: Resources and Competitive Advantage

Building Competitive Advantage Through Functional Level Strategies

Business Level Strategy

Business Level Strategy and the Industry Environment

Strategy and Technology

Strategy in the Global Environment

Corporate-Level Strategy: Horizontal Integration, Vertical Integration, and Strategic Outsourcing

Corporate Level Strategy: Related and Unrelated Diversification

Implementing Strategy Through Organization

Filters