Question 1

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

Accepted Answer

A) Approving decisions made by divisional managers 
B) Monitoring line managers 
C) Aligning corporate strategy with stockholder interests 
D) Creating contracts with suppliers 
E) Designing marketing strategies for the company 
A) Approving decisions made by divisional managers 
B) Monitoring line managers 
C) Aligning corporate strategy with stockholder interests 
D) Creating contracts with suppliers 
E) Designing marketing strategies for the company

Question 2

are internal stakeholders in a company.

Accepted Answer

A) Customers 
B) Goverrnnent regulators 
C) Board members 
D) Suppliers 
E) Creditors 
A) Customers 
B) Goverrnnent regulators 
C) Board members 
D) Suppliers 
E) Creditors

Question 3

Explain the principles of agency theory, including the issues it addresses.What are some effective ways to deal with agency problems, as implied or stated by agency theory?

Accepted Answer

Agency theory addresses situations where

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) Self-dealing 
B) The board of directors 
C) Stock-based compensation schemes 
D) Strategic control systems 
E) Takeover constraints 
A) Self-dealing 
B) The board of directors 
C) Stock-based compensation schemes 
D) Strategic control systems 
E) Takeover constraints

Question 6

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 7

Consider a national chain of company-owned fast-food restaurants.For this finn, 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 8

Strike price is the price at which the stock was trading when the option was originally granted.

Accepted Answer

A) True 
 B)False

Question 9

Emphasizing on current profitability at the expense of future profitability and profit growth makes an enterprise more attractive to shareholders.

Accepted Answer

A) True 
 B)False

Question 10

Stock-based compensation schemes for senior executives are designed to align the interests of managers with those of stockholders.

Accepted Answer

A) True 
 B)False

Question 11

To ensure that basic ethical principles are adhered to in the organization, managers should:

Accepted Answer

A) build an organizational culture that places a high value on economic aspects. 
B) make sure that leaders within the business only articulate the rhetoric of ethical behavior. 
C) put minimal governance processes in place. 
D) check with prior employees regarding someone's reputation before hiring. 
E) foster and encourage on-the-job consumption. 
A) build an organizational culture that places a high value on economic aspects. 
B) make sure that leaders within the business only articulate the rhetoric of ethical behavior. 
C) put minimal governance processes in place. 
D) check with prior employees regarding someone's reputation before hiring. 
E) foster and encourage on-the-job consumption.

Question 12

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

Accepted Answer

A) companies should eliminate the principal-agent approach. 
B) companies should have a no-layoff policy. 
C) top managers should articulate and model ethical behaviors. 
D) top managers should generously grant stock options. 
E) companies should hire and promote employees with a strong focus on economic gains. 
A) companies should eliminate the principal-agent approach. 
B) companies should have a no-layoff policy. 
C) top managers should articulate and model ethical behaviors. 
D) top managers should generously grant stock options. 
E) companies should hire and promote employees with a strong focus on economic gains.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

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

Question 15

Gamma Corp.has recently bought stocks in an under performing company that has failed to maximize stockholder wealth.Gamma Corp.has made changes to the top management structure of the company and has persuaded the management to pursue strategies that maximize the wealth of stockholders.Gamma Corp.has been able to earn millions by doing so.Which of the following concepts is illustrated in this scenario?

Accepted Answer

A) Greenmail 
B) Agency theory 
C) Information asymmetry 
D) Self-dealing 
E) On-the-job consumption 
A) Greenmail 
B) Agency theory 
C) Information asymmetry 
D) Self-dealing 
E) On-the-job consumption

Question 16

When managers of a finn 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) information manipulation. 
C) downsizing. 
D) greenmail. 
E) self-dealing. 
A) opportunistic exploitation. 
B) information manipulation. 
C) downsizing. 
D) greenmail. 
E) self-dealing.

Question 17

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 under him than required and he has not told the CEO about this, even though there are other departments that are in need of more employees.Which of the following concepts is illustrated here?

Accepted Answer

A) Information asymmetry 
B) On-the-job consumption 
C) Greenmail 
D) Glass-ceiling effect 
E) Takeover constraint 
A) Information asymmetry 
B) On-the-job consumption 
C) Greenmail 
D) Glass-ceiling effect 
E) Takeover constraint

Question 18

Maximizing long-run profitability and profit growth is the best way to satisfy the claims of several key stakeholder groups irrespective of how the company does so.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements about the board of directors is NOT true?

Accepted Answer

A) Board members are elected by stockholders. 
B) The board can be held legally accountable for a company's actions. 
C) The board has the legal authority to hire, fire, and compensate the CEO. 
D) All the directors are full-time employees of the company. 
E) Outside directors help perform the monitoring function of the board. 
A) Board members are elected by stockholders. 
B) The board can be held legally accountable for a company's actions. 
C) The board has the legal authority to hire, fire, and compensate the CEO. 
D) All the directors are full-time employees of the company. 
E) Outside directors help perform the monitoring function of the board.

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

are internal stakeholders in a company.

Explain the principles of agency theory, including the issues it addresses.What are some effective ways to deal with agency problems, as implied or stated by agency theory?

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

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

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

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

Strike price is the price at which the stock was trading when the option was originally granted.

Emphasizing on current profitability at the expense of future profitability and profit growth makes an enterprise more attractive to shareholders.

Stock-based compensation schemes for senior executives are designed to align the interests of managers with those of stockholders.

To ensure that basic ethical principles are adhered to in the organization, managers should:

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

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

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

When managers of a finn 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:

Maximizing long-run profitability and profit growth is the best way to satisfy the claims of several key stakeholder groups irrespective of how the company does so.

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

Which of the following statements about the board of directors is NOT true?

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

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

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

are internal stakeholders in a company.

Explain the principles of agency theory, including the issues it addresses.What are some effective ways to deal with agency problems, as implied or stated by agency theory?

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

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

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

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

Strike price is the price at which the stock was trading when the option was originally granted.

Emphasizing on current profitability at the expense of future profitability and profit growth makes an enterprise more attractive to shareholders.

Stock-based compensation schemes for senior executives are designed to align the interests of managers with those of stockholders.

To ensure that basic ethical principles are adhered to in the organization, managers should:

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

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

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

When managers of a finn 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:

Maximizing long-run profitability and profit growth is the best way to satisfy the claims of several key stakeholder groups irrespective of how the company does so.

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

Which of the following statements about the board of directors is NOT true?

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

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