Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

In applying agency theory to problems of corporate management,the principals are the

Accepted Answer

A)  employees. 
B)  CEO. 
C)  top management team. 
D)  CEO and the top management team. 
E)  stockholders. 
A)  employees. 
B)  CEO. 
C)  top management team. 
D)  CEO and the top management team. 
E)  stockholders.

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Sarbanes-Oxley,federal legislation enacted in 2002,requires

Accepted Answer

A)  CEOs to endorse their company's financial statements. 
B)  CFOs to endorse their company's financial statements. 
C)  companies to use the same accounting firm for auditing and consulting services. 
D)  members of the board of directors to post a surety bond. 
E)  CEOs and CFOs to endorse their company's financial statements. 
A)  CEOs to endorse their company's financial statements. 
B)  CFOs to endorse their company's financial statements. 
C)  companies to use the same accounting firm for auditing and consulting services. 
D)  members of the board of directors to post a surety bond. 
E)  CEOs and CFOs to endorse their company's financial statements.

Question 5

What is the major purpose of a corporate board of directors?

Accepted Answer

A)  To approve all decisions made by senior managers. 
B)  To monitor corporate strategy decisions and ensure that they are consistent with stockholders' interests. 
C)  To protect a company's consumers. 
D)  To select additional board members. 
E)  To approve corporate compensation systems. 
A)  To approve all decisions made by senior managers. 
B)  To monitor corporate strategy decisions and ensure that they are consistent with stockholders' interests. 
C)  To protect a company's consumers. 
D)  To select additional board members. 
E)  To approve corporate compensation systems.

Question 6

In the 1990s,Sotheby's and Christie's,the two largest fine-art auction houses in the world were colliding to fix prices.These practices are acceptable in the business world to create competitiveness through collaborations.

Accepted Answer

A) True 
 B)False

Question 7

Critics of corporate governance state that boards with more inside directors than outside directors are generally an effective governance mechanism because they know more about how the company works.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not a governance mechanism used to align the interests of managers and stockholders?

Accepted Answer

A)  Stockholder meetings 
B)  The board of directors 
C)  Stock-based compensation schemes 
D)  The mission statement 
E)  Takeover constraints 
A)  Stockholder meetings 
B)  The board of directors 
C)  Stock-based compensation schemes 
D)  The mission statement 
E)  Takeover constraints

Question 9

A company's stakeholders include which of the following?

Accepted Answer

A)  Stockholders 
B)  Creditors 
C)  Employees 
D)  Customers 
E)  All of these 
A)  Stockholders 
B)  Creditors 
C)  Employees 
D)  Customers 
E)  All of these

Question 10

Nicole is a salesperson at a local Ford dealership.Her bonus pay is dependent upon surpassing sales targets,thus increasing the profitability of the company.This is a form of which of the following governance mechanisms?

Accepted Answer

A)  Stock options 
B)  Self-dealing 
C)  The takeover constraint 
D)  Employee incentives 
E)  Greenmail 
A)  Stock options 
B)  Self-dealing 
C)  The takeover constraint 
D)  Employee incentives 
E)  Greenmail

Question 11

Why are some managers thought to engage in empire building?

Accepted Answer

A)  Growth results in large company size, and large size satisfies managers' needs for power, status, income, and job security. 
B)  The pursuit of growth represents the best way of maximizing the long-run profitability of the company. 
C)  Growth is designed to increase market share, which in turn increases company profits. 
D)  Companies that do not grow stagnate. 
E)  Stockholders would rather invest in large companies than in small ones. 
A)  Growth results in large company size, and large size satisfies managers' needs for power, status, income, and job security. 
B)  The pursuit of growth represents the best way of maximizing the long-run profitability of the company. 
C)  Growth is designed to increase market share, which in turn increases company profits. 
D)  Companies that do not grow stagnate. 
E)  Stockholders would rather invest in large companies than in small ones.

Question 12

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 13

The takeover constraint refers to the

Accepted Answer

A)  opportunity to acquire competitors if they are smaller than the acquiring company. 
B)  risk of being acquired by another company. 
C)  drop in the price of a share of stock due to a rumored takeover of the company. 
D)  lack of resources required to acquire another company. 
E)  reluctance of a company's managers to acquire another company. 
A)  opportunity to acquire competitors if they are smaller than the acquiring company. 
B)  risk of being acquired by another company. 
C)  drop in the price of a share of stock due to a rumored takeover of the company. 
D)  lack of resources required to acquire another company. 
E)  reluctance of a company's managers to acquire another company.

Question 14

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 15

Which of the following is not something that managers can do to make sure that ethical issues are considered in business decisions?

Accepted Answer

A)  Hire and promote people who have a strong sense of personal ethics 
B)  Build an organizational culture that places a high value on ethical behavior 
C)  Adopt the Friedman doctrine 
D)  Act with moral courage 
E)  Put decision-making processes in place that require people to consider ethical dimensions of business decisions 
A)  Hire and promote people who have a strong sense of personal ethics 
B)  Build an organizational culture that places a high value on ethical behavior 
C)  Adopt the Friedman doctrine 
D)  Act with moral courage 
E)  Put decision-making processes in place that require people to consider ethical dimensions of business decisions

Question 16

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

Accepted Answer

A)  Today, the average CEO earns more than 350 times the pay of the average blue-collar worker. 
B)  Most of CEO pay is in the form of salary. 
C)  CEO compensation is not closely tied to corporate performance in most firms. 
D)  CEO pay is rising more rapidly than pay for other workers. 
E)  The level of CEO compensation is determined by the corporate board of directors. 
A)  Today, the average CEO earns more than 350 times the pay of the average blue-collar worker. 
B)  Most of CEO pay is in the form of salary. 
C)  CEO compensation is not closely tied to corporate performance in most firms. 
D)  CEO pay is rising more rapidly than pay for other workers. 
E)  The level of CEO compensation is determined by the corporate board of directors.

Question 17

Consider a national chain of company-owned fast-food restaurants.For this firm,list the important stakeholders.Then describe how each stakeholder group can affect the firm's profitability.

Accepted Answer

Internal stakeholders of a national chai

Question 18

Stockholders receive a return on their investment in a company's stock from dividend payments and capital appreciation.

Accepted Answer

A) True 
 B)False

Question 19

The takeover constraint

Accepted Answer

A)  effectively limits the number of independent companies that a company can acquire. 
B)  limits the degree to which managers can pursue strategies that are at variance with stockholder interests. 
C)  is a theoretical construct that can be ignored in practice. 
D)  limits the freedom that individual companies have to maximize their long-run return on investment. 
E)  is imposed by corporate managers on errant business-level managers. 
A)  effectively limits the number of independent companies that a company can acquire. 
B)  limits the degree to which managers can pursue strategies that are at variance with stockholder interests. 
C)  is a theoretical construct that can be ignored in practice. 
D)  limits the freedom that individual companies have to maximize their long-run return on investment. 
E)  is imposed by corporate managers on errant business-level managers.

Question 20

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 the company's competitive strategy 
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 the company's competitive strategy 
E)  Make sure the audited financial statements present a true picture of the company's financial situation

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

In applying agency theory to problems of corporate management,the principals are the

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

Sarbanes-Oxley,federal legislation enacted in 2002,requires

What is the major purpose of a corporate board of directors?

In the 1990s,Sotheby's and Christie's,the two largest fine-art auction houses in the world were colliding to fix prices.These practices are acceptable in the business world to create competitiveness through collaborations.

Critics of corporate governance state that boards with more inside directors than outside directors are generally an effective governance mechanism because they know more about how the company works.

Which of the following is not a governance mechanism used to align the interests of managers and stockholders?

A company's stakeholders include which of the following?

Nicole is a salesperson at a local Ford dealership.Her bonus pay is dependent upon surpassing sales targets,thus increasing the profitability of the company.This is a form of which of the following governance mechanisms?

Why are some managers thought to engage in empire building?

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

The takeover constraint refers to the

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 is not something that managers can do to make sure that ethical issues are considered in business decisions?

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

Consider a national chain of company-owned fast-food restaurants.For this firm,list the important stakeholders.Then describe how each stakeholder group can affect the firm's profitability.

Stockholders receive a return on their investment in a company's stock from dividend payments and capital appreciation.

The takeover constraint

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

Strategic Leadership: Managing the Strategy-Making Process for Competitive Advantage

External Analysis: The Identification of Opportunities and Threats

Internal Analysis: Distinctive Competencies, Competitive Advantage, and Profitability

Building Competitive Advantage Through Functional-Level Strategy

Building Competitive Advantage Through 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 in Companies That Compete in a Single Industry

Implementing Strategy in Companies That Compete Across Industries and Countries

Filters

Exam 11: Corporate Performance, Governance, and Business Ethics

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

In applying agency theory to problems of corporate management,the principals are the

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

Sarbanes-Oxley,federal legislation enacted in 2002,requires

What is the major purpose of a corporate board of directors?

In the 1990s,Sotheby's and Christie's,the two largest fine-art auction houses in the world were colliding to fix prices.These practices are acceptable in the business world to create competitiveness through collaborations.

Critics of corporate governance state that boards with more inside directors than outside directors are generally an effective governance mechanism because they know more about how the company works.

Which of the following is not a governance mechanism used to align the interests of managers and stockholders?

A company's stakeholders include which of the following?

Nicole is a salesperson at a local Ford dealership.Her bonus pay is dependent upon surpassing sales targets,thus increasing the profitability of the company.This is a form of which of the following governance mechanisms?

Why are some managers thought to engage in empire building?

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

The takeover constraint refers to the

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 is not something that managers can do to make sure that ethical issues are considered in business decisions?

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

Consider a national chain of company-owned fast-food restaurants.For this firm,list the important stakeholders.Then describe how each stakeholder group can affect the firm's profitability.

Stockholders receive a return on their investment in a company's stock from dividend payments and capital appreciation.

The takeover constraint

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

Strategic Leadership: Managing the Strategy-Making Process for Competitive Advantage

External Analysis: The Identification of Opportunities and Threats

Internal Analysis: Distinctive Competencies, Competitive Advantage, and Profitability

Building Competitive Advantage Through Functional-Level Strategy

Building Competitive Advantage Through 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 in Companies That Compete in a Single Industry

Implementing Strategy in Companies That Compete Across Industries and Countries

Filters