Exam 16: Financing and Governing the Corporation Globally

Principal-agent conflicts result in agency costs.

In the principal-agent relationship,principals are managers to whom authority is delegated.

Private equity utilizes the stock market,as opposed to the bond market,to discipline managers.

Which of the following statements about the board of directors is untrue? 

Executives on the top management team (TMT) are led by the _____.

Differentiate between concentrated and diffused ownership.

Owners,managers,and boards of directors are collectively known as the "tripod" of corporate governance.

Tunneling is a legal method of solving principal-principal conflicts.

In _____ ownership and control,founders start up firms and completely own and control them on an individual or family basis.

_____ refers to the stock in a firm (usually expressed in shares),which represents the owners' rights.

LBO-based private equity transactions are associated with three major changes in corporate governance.List these changes.

The market for corporate control enables the "wholesale" removal of entrenched managers.

Corporations in continental Europe and Japan rely mostly on _____.

A voice-based mechanism indicates that shareholders no longer have patience and are willing to "exit" by selling their shares.

From a corporate governance perspective,the market for corporate control complements product market competition and the market for private equity.

Which of the following statements about governance mechanisms is misleading? 

Managerial human capital refers to some of the most valuable,rare,and hard-to-imitate skills and abilities acquired by top managers and directors.

Corporations in _____ are market-oriented,high-tension systems.

Describe how institutions and resources influence corporate governance.

_____ refers to a loan that the firm needs to pay back at a given time with interest.