Question 1

Define patient and impatient capitalism and discuss how each may lead to different decision-making in the shareholder wealth maximization model.

Accepted Answer

Patient capitalism may be defined as a focus on long-term shareholder wealth maximization and is often associated with management focusing on long term investments with less emphasis placed on short-term or trendy objectives. On the other hand, impatient capitalism could be described as a destructive focus on the short term by both management and investors. These differences in the time horizon could lead to different and perhaps inferior decisions by existing management and ultimately be costly to the shareholders.

Question 2

A recent study shows that privately held firms use less financial leverage and enjoy lower costs of debt than publicly traded firms.

Accepted Answer

A) True 
 B)False  True

Question 3

The number of publicly traded firms:

Accepted Answer

A) peaked in the U.S. in 1996. 
B) peaked worldwide in 1996. 
C) increased significantly in 2009 as a result of the international financial crisis. 
D) all of the above 
A) peaked in the U.S. in 1996. 
B) peaked worldwide in 1996. 
C) increased significantly in 2009 as a result of the international financial crisis. 
D) all of the above A

Question 4

In recent years the trend has been for markets to increasing focus on the shareholder wealth form of wealth maximization.

Accepted Answer

A) True 
 B)False

Question 5

The relationship among stakeholders used to determine and control the strategic direction and performance of an organization is termed:

Accepted Answer

A) corporate governance. 
B) Anglo-American activism. 
C) capital structure. 
D) working capital management. 
A) corporate governance. 
B) Anglo-American activism. 
C) capital structure. 
D) working capital management.

Question 6

In the stakeholder capitalism model (SCM)the assumption of market efficiency is absolutely critical.

Accepted Answer

A) True 
 B)False

Question 7

Systematic risk can be eliminated through portfolio diversification.

Accepted Answer

A) True 
 B)False

Question 8

If share price rises from $12 to $15 per share, and pays a dividend of $1 per share, what was the rate of return to shareholders?

Accepted Answer

A) 26.67% 
B) -13.33% 
C) 33.33% 
D) 16.67% 
A) 26.67% 
B) -13.33% 
C) 33.33% 
D) 16.67%

Question 9

The Shareholder Wealth Maximization Model (SWM):

Accepted Answer

A) combines the interests and inputs of shareholders, creditors, management, employees, and society. 
B) is being usurped by the Stakeholder Capitalism Model as those types of MNEs dominate their global industry segments. 
C) clearly places shareholders as the primary stakeholder. 
D) is the dominant form of corporate management in the European-Japanese governance system. 
A) combines the interests and inputs of shareholders, creditors, management, employees, and society. 
B) is being usurped by the Stakeholder Capitalism Model as those types of MNEs dominate their global industry segments. 
C) clearly places shareholders as the primary stakeholder. 
D) is the dominant form of corporate management in the European-Japanese governance system.

Question 10

Generally speaking, which of the following is NOT considered an important factor in the composition and control of corporate boards of directors?

Accepted Answer

A) the number of insider vs outside directors 
B) the total number of directors on the board 
C) the composition of the compensation committee 
D) All of the above are important factors of board composition. 
A) the number of insider vs outside directors 
B) the total number of directors on the board 
C) the composition of the compensation committee 
D) All of the above are important factors of board composition.

Question 11

The stakeholder capitalism model:

Accepted Answer

A) typically avoids the flaw of impatient capital. 
B) tries to meet the desires of multiple stakeholders. 
C) may leave management without a clear signal about tradeoffs among the several stakeholders. 
D) all of the above 
A) typically avoids the flaw of impatient capital. 
B) tries to meet the desires of multiple stakeholders. 
C) may leave management without a clear signal about tradeoffs among the several stakeholders. 
D) all of the above

Question 12

According to recent research, family-owned firms in some highly-developed economies typically outperform publicly-owned firms.

Accepted Answer

A) True 
 B)False

Question 13

According to the authors, dual classes of voting stock are the norm in non-Anglo-American markets.

Accepted Answer

A) True 
 B)False

Question 14

State Owned Enterprises (SOEs)by their very name cannot be traded on stock exchanges because they are government owned.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following operational goals for the international firm may be incompatible with the others?

Accepted Answer

A) maintaining a strong local currency 
B) maximization of after-tax income 
C) minimization of the firm's effective global tax burden 
D) Each of these goals may be incompatible with one or more of the others. 
A) maintaining a strong local currency 
B) maximization of after-tax income 
C) minimization of the firm's effective global tax burden 
D) Each of these goals may be incompatible with one or more of the others.

Question 16

The Stakeholder Capitalism Model (SCM):

Accepted Answer

A) clearly places shareholders as the primary stakeholder. 
B) combines the interests and inputs of shareholders, creditors, management, employees, and society. 
C) has financial profit as its goal and is often termed impatient capital. 
D) is the Anglo-American model of corporate governance. 
A) clearly places shareholders as the primary stakeholder. 
B) combines the interests and inputs of shareholders, creditors, management, employees, and society. 
C) has financial profit as its goal and is often termed impatient capital. 
D) is the Anglo-American model of corporate governance.

Question 17

The stakeholder capitalism model assumes that only systematic risk "counts" or is a prime concern for management.

Accepted Answer

A) True 
 B)False

Question 18

Patient Capitalism is characterized by short-term focus by both management and investors.

Accepted Answer

A) True 
 B)False

Question 19

According to recent research, family-owned firms in some highly-developed economies typically outperform publicly-owned firms.

Accepted Answer

A) True 
 B)False

Question 20

The study of how shareholders can motivate management to accept the prescriptions of the shareholder wealth maximization model is called:

Accepted Answer

A) market efficiency. 
B) the SWM model. 
C) agency theory. 
D) the SCM model. 
A) market efficiency. 
B) the SWM model. 
C) agency theory. 
D) the SCM model.

Define patient and impatient capitalism and discuss how each may lead to different decision-making in the shareholder wealth maximization model.

A recent study shows that privately held firms use less financial leverage and enjoy lower costs of debt than publicly traded firms.

The number of publicly traded firms:

In recent years the trend has been for markets to increasing focus on the shareholder wealth form of wealth maximization.

The relationship among stakeholders used to determine and control the strategic direction and performance of an organization is termed:

In the stakeholder capitalism model (SCM)the assumption of market efficiency is absolutely critical.

Systematic risk can be eliminated through portfolio diversification.

If share price rises from $12 to $15 per share, and pays a dividend of $1 per share, what was the rate of return to shareholders?

The Shareholder Wealth Maximization Model (SWM):

Generally speaking, which of the following is NOT considered an important factor in the composition and control of corporate boards of directors?

The stakeholder capitalism model:

According to recent research, family-owned firms in some highly-developed economies typically outperform publicly-owned firms.

According to the authors, dual classes of voting stock are the norm in non-Anglo-American markets.

State Owned Enterprises (SOEs)by their very name cannot be traded on stock exchanges because they are government owned.

Which of the following operational goals for the international firm may be incompatible with the others?

The Stakeholder Capitalism Model (SCM):

The stakeholder capitalism model assumes that only systematic risk "counts" or is a prime concern for management.

Patient Capitalism is characterized by short-term focus by both management and investors.

According to recent research, family-owned firms in some highly-developed economies typically outperform publicly-owned firms.

The study of how shareholders can motivate management to accept the prescriptions of the shareholder wealth maximization model is called:

Current Multinational Challenges and the Global Economy

The International Monetary System

The Balance of Payments

The Continuing Global Financial Crisis

The Foreign Exchange Theory and Markets

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination and Forecasting

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Raising Equity and Debt Globally

Multinational Tax Management

International Portfolio Theory and Diversification

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

Working Capital Management

International Trade Finance

Filters

Exam 2: Corporate Ownership, Goals, and Governance

Define patient and impatient capitalism and discuss how each may lead to different decision-making in the shareholder wealth maximization model.

A recent study shows that privately held firms use less financial leverage and enjoy lower costs of debt than publicly traded firms.

The number of publicly traded firms:

In recent years the trend has been for markets to increasing focus on the shareholder wealth form of wealth maximization.

The relationship among stakeholders used to determine and control the strategic direction and performance of an organization is termed:

In the stakeholder capitalism model (SCM)the assumption of market efficiency is absolutely critical.

Systematic risk can be eliminated through portfolio diversification.

If share price rises from $12 to $15 per share, and pays a dividend of $1 per share, what was the rate of return to shareholders?

The Shareholder Wealth Maximization Model (SWM):

Generally speaking, which of the following is NOT considered an important factor in the composition and control of corporate boards of directors?

The stakeholder capitalism model:

According to recent research, family-owned firms in some highly-developed economies typically outperform publicly-owned firms.

According to the authors, dual classes of voting stock are the norm in non-Anglo-American markets.

State Owned Enterprises (SOEs)by their very name cannot be traded on stock exchanges because they are government owned.

Which of the following operational goals for the international firm may be incompatible with the others?

The Stakeholder Capitalism Model (SCM):

The stakeholder capitalism model assumes that only systematic risk "counts" or is a prime concern for management.

Patient Capitalism is characterized by short-term focus by both management and investors.

According to recent research, family-owned firms in some highly-developed economies typically outperform publicly-owned firms.

The study of how shareholders can motivate management to accept the prescriptions of the shareholder wealth maximization model is called:

Current Multinational Challenges and the Global Economy

The International Monetary System

The Balance of Payments

The Continuing Global Financial Crisis

The Foreign Exchange Theory and Markets

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination and Forecasting

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Raising Equity and Debt Globally

Multinational Tax Management

International Portfolio Theory and Diversification

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

Working Capital Management

International Trade Finance

Filters