Question 1

Different stakeholders supply different resources to the company and,in exchange,they expect their interests to be satisfied.

Accepted Answer

A) True 
 B)False

Question 2

Nike is no longer one of the leading marketers of athletic shoes and apparel in the world.

Accepted Answer

A) True 
 B)False

Question 3

One assumption of agency theory is that the principals have more information about the resources that are being managed than the agents do.

Accepted Answer

A) True 
 B)False

Question 4

Why should satisfying stockholder demands receive so much attention in many corporate mission statements?

Accepted Answer

A) Stockholders are the most powerful stakeholder group that a company has to satisfy. 
B) Stockholders are the legal owners of the company and are the providers of risk capital. 
C) Stockholders have been successful in blackmailing companies to get their interest satisfied before those of other claimants. 
D) Typically,stockholders have the most invested in the company's continued survival. 
E) Managers feel obliged to pay lip service to stockholder demands. 
A) Stockholders are the most powerful stakeholder group that a company has to satisfy. 
B) Stockholders are the legal owners of the company and are the providers of risk capital. 
C) Stockholders have been successful in blackmailing companies to get their interest satisfied before those of other claimants. 
D) Typically,stockholders have the most invested in the company's continued survival. 
E) Managers feel obliged to pay lip service to stockholder demands.

Question 5

Maximizing long-run profitability and profit growth is the best way to satisfy the claims of several key stakeholder groups as long as the company does so legally and in a manner consistent with societal expectations.

Accepted Answer

A) True 
 B)False

Question 6

When corporate CEOs and top managers use their power and control over funds to satisfy their personal desires for wealth or status,this is called

Accepted Answer

A) on-the-job consumption. 
B) agency theory. 
C) information asymmetry. 
D) a tradeoff between stakeholders. 
E) a performance measurement. 
A) on-the-job consumption. 
B) agency theory. 
C) information asymmetry. 
D) a tradeoff between stakeholders. 
E) a performance measurement.

Question 7

To satisfy stockholders,many companies seek to

Accepted Answer

A) increase the share value of a company's stock. 
B) introduce as many new products as possible. 
C) reward executives handsomely. 
D) minimize global expansion. 
E) reduce the number of custom-made products produced. 
A) increase the share value of a company's stock. 
B) introduce as many new products as possible. 
C) reward executives handsomely. 
D) minimize global expansion. 
E) reduce the number of custom-made products produced.

Question 8

All stakeholders are in an exchange relationship with the company.

Accepted Answer

A) True 
 B)False

Question 9

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 10

The term information asymmetry describes the difference in personal ethics that agents and principals have.

Accepted Answer

A) True 
 B)False

Question 11

A typical board of directors is composed of

Accepted Answer

A) inside directors. 
B) external directors. 
C) inside directors and consumer advocates. 
D) outside directors and union representatives. 
E) inside and outside directors. 
A) inside directors. 
B) external directors. 
C) inside directors and consumer advocates. 
D) outside directors and union representatives. 
E) inside and outside directors.

Question 12

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 13

Which of the following governance mechanisms is regarded as the option of last resort?

Accepted Answer

A) Strategic control system 
B) Takeover 
C) Board of directors 
D) Stock-based compensation system 
E) Financial statements and auditors 
A) Strategic control system 
B) Takeover 
C) Board of directors 
D) Stock-based compensation system 
E) Financial statements and auditors

Question 14

When managers of a firm seek to unilaterally rewrite the terms of a contract with suppliers,buyers,or complement providers in a way that is more favorable to their firm,they are engaging in

Accepted Answer

A) opportunistic exploitation. 
B) ethical behavior. 
C) corruption. 
D) philosophical ethics. 
E) self-dealing. 
A) opportunistic exploitation. 
B) ethical behavior. 
C) corruption. 
D) philosophical ethics. 
E) self-dealing.

Question 15

When are the interests of stockholders and senior managers likely to be most closely aligned?

Accepted Answer

A) When the board of directors is dominated by insiders 
B) When managers receive most of their compensation in the form of a regular salary 
C) When stockholders are weak 
D) When managers receive most of their compensation in the form of stock options 
E) When corporate raiders are unable to mount a takeover bid 
A) When the board of directors is dominated by insiders 
B) When managers receive most of their compensation in the form of a regular salary 
C) When stockholders are weak 
D) When managers receive most of their compensation in the form of stock options 
E) When corporate raiders are unable to mount a takeover bid

Question 16

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 17

An effective governance arrangement exists when the CEO is also the chair of the board of directors.

Accepted Answer

A) True 
 B)False

Question 18

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

Question 19

To make sure that ethical issues are considered in business decisions,

Accepted Answer

A) a company should use a bottom-up approach. 
B) a company should have a no-layoff policy. 
C) top managers should articulate and model ethical behaviors. 
D) a company should give seminars to teach people what is legal and not legal. 
E) a company should hire and promote employees who do whatever it takes to achieve organizational objectives. 
A) a company should use a bottom-up approach. 
B) a company should have a no-layoff policy. 
C) top managers should articulate and model ethical behaviors. 
D) a company should give seminars to teach people what is legal and not legal. 
E) a company should hire and promote employees who do whatever it takes to achieve organizational objectives.

Question 20

Identify and discuss the governance mechanisms that help align the incentives of stockholders and managers and help monitor and control management.

Accepted Answer

Agency problems in organizations are wel

Different stakeholders supply different resources to the company and,in exchange,they expect their interests to be satisfied.

Nike is no longer one of the leading marketers of athletic shoes and apparel in the world.

One assumption of agency theory is that the principals have more information about the resources that are being managed than the agents do.

Why should satisfying stockholder demands receive so much attention in many corporate mission statements?

Maximizing long-run profitability and profit growth is the best way to satisfy the claims of several key stakeholder groups as long as the company does so legally and in a manner consistent with societal expectations.

When corporate CEOs and top managers use their power and control over funds to satisfy their personal desires for wealth or status,this is called

To satisfy stockholders,many companies seek to

All stakeholders are in an exchange relationship with the company.

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

The term information asymmetry describes the difference in personal ethics that agents and principals have.

A typical board of directors is composed of

Sarbanes-Oxley,federal legislation enacted in 2002,requires

Which of the following governance mechanisms is regarded as the option of last resort?

When managers of a firm seek to unilaterally rewrite the terms of a contract with suppliers,buyers,or complement providers in a way that is more favorable to their firm,they are engaging in

When are the interests of stockholders and senior managers likely to be most closely aligned?

The takeover constraint refers to the

An effective governance arrangement exists when the CEO is also the chair of the board of directors.

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

To make sure that ethical issues are considered in business decisions,

Identify and discuss the governance mechanisms that help align the incentives of stockholders and managers and help monitor and control management.

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

Different stakeholders supply different resources to the company and,in exchange,they expect their interests to be satisfied.

Nike is no longer one of the leading marketers of athletic shoes and apparel in the world.

One assumption of agency theory is that the principals have more information about the resources that are being managed than the agents do.

Why should satisfying stockholder demands receive so much attention in many corporate mission statements?

Maximizing long-run profitability and profit growth is the best way to satisfy the claims of several key stakeholder groups as long as the company does so legally and in a manner consistent with societal expectations.

When corporate CEOs and top managers use their power and control over funds to satisfy their personal desires for wealth or status,this is called

To satisfy stockholders,many companies seek to

All stakeholders are in an exchange relationship with the company.

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

The term information asymmetry describes the difference in personal ethics that agents and principals have.

A typical board of directors is composed of

Sarbanes-Oxley,federal legislation enacted in 2002,requires

Which of the following governance mechanisms is regarded as the option of last resort?

When managers of a firm seek to unilaterally rewrite the terms of a contract with suppliers,buyers,or complement providers in a way that is more favorable to their firm,they are engaging in

When are the interests of stockholders and senior managers likely to be most closely aligned?

The takeover constraint refers to the

An effective governance arrangement exists when the CEO is also the chair of the board of directors.

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

To make sure that ethical issues are considered in business decisions,

Identify and discuss the governance mechanisms that help align the incentives of stockholders and managers and help monitor and control management.

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