Question 1

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. D

Question 2

Privatization is a term used to describe:

Accepted Answer

A)   firms that are purchased by the government.
B)   government operations that are purchased by corporations and other investors.
C)   firms that do not use publicly available debt.
D)   non-public meetings held by members of interlocking directorates. B

Question 3

Which of the following is NOT a possible and appropriate response by shareholders dissatisfied with existing firm management of a publicly traded firm?

Accepted Answer

A)   Shareholders could sell their shares of stock.
B)   Shareholders could remain quietly disgruntled.
C)   Shareholders, perhaps with the help of others, could attempt to initiate a takeover.
D)   All of these responses may be possible and appropriate. D

Question 4

Non-Anglo-American markets are dominated by the "one-vote-one-share" rule.

Accepted Answer

A) True 
 B)False

Question 5

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.

Question 6

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

Question 7

Which of the following is NOT an important concept when distinguishing between international and domestic financial management?

Accepted Answer

A)   corporate governance
B)   culture, history, and institutions
C)   political risk
D)   All of the above are important distinguishing concepts.

Question 8

Unsystematic risk can be defined as:

Accepted Answer

A)   the total risk to the firm.
B)   the risk of the individual security.
C)   the added risk that a firm's shares bring to a diversified portfolio.
D)   the risk of the market in general.

Question 9

Anglo-American markets is a term used to describe business markets in:

Accepted Answer

A)   North, Central, and South America.
B)   the United States, Canada, and Western Europe.
C)   the United States, United Kingdom, Canada, Australia and New Zealand.
D)   the United States, France, Britain, and Germany.

Question 10

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.

Question 11

In the Anglo-American model of corporate governance, the primary goal of management is to:

Accepted Answer

A)   maximize the wealth of all stakeholders.
B)   maximize shareholder wealth.
C)   minimize costs.
D)   minimize risk.

Question 12

Describe the management objectives of a firm governed by the shareholder wealth maximization model and one governed by the stakeholder wealth maximization model. Give an example of how these two models may lead to different decision-making by executive management.

Accepted Answer

The answer of Describe the management objectives of a firm...

Question 13

What are the most important distinctions that make state owned enterprises (SOEs) different from other forms of government organizations?

Accepted Answer

The answer of What are the most important distinctions that...

Question 14

Foreign stock markets are frequently characterized by controlling shareholders for the individual publicly traded firms. Which of the following is NOT identified by the authors as typical controlling shareholders?

Accepted Answer

A)   the government (for example, privatized utilities) 
B)   institutions (such as banks in Germany) 
C)   family (such as in France) 
D)   All of the above were identified by the authors as controlling shareholders.

Question 15

Having Anglo-Americans as members of the board of directors of a non-Anglo-American firm signals poor corporate governance in the firm.

Accepted Answer

A) True 
 B)False

Question 16

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.

Question 17

Dividend yield is the change in the share price of stock as traded in the public equity markets.

Accepted Answer

A) True 
 B)False

Question 18

The problems that may arise due to the separation of ownership and management in large business organizations are known as:

Accepted Answer

A)   separation anxiety.
B)   the agency problem.
C)   corporate disconnect theory.
D)   none of the above

Question 19

The Board of Directors:

Accepted Answer

A)   consists exclusively of the officers of the corporation.
B)   is the legal body which is accountable for the governance of the corporation.
C)   are not subject to the external forces of the marketplace.
D)   is appointed by the Securities and Exchange Commission (SE
C)  .

Question 20

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.

Exam 4: Financial Goals and Corporate Governance

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

Privatization is a term used to describe:

Which of the following is NOT a possible and appropriate response by shareholders dissatisfied with existing firm management of a publicly traded firm?

Non-Anglo-American markets are dominated by the "one-vote-one-share" rule.

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

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

Which of the following is NOT an important concept when distinguishing between international and domestic financial management?

Unsystematic risk can be defined as:

Anglo-American markets is a term used to describe business markets in:

The Shareholder Wealth Maximization Model (SWM) :

In the Anglo-American model of corporate governance, the primary goal of management is to:

Describe the management objectives of a firm governed by the shareholder wealth maximization model and one governed by the stakeholder wealth maximization model. Give an example of how these two models may lead to different decision-making by executive management.

What are the most important distinctions that make state owned enterprises (SOEs) different from other forms of government organizations?

Foreign stock markets are frequently characterized by controlling shareholders for the individual publicly traded firms. Which of the following is NOT identified by the authors as typical controlling shareholders?

Having Anglo-Americans as members of the board of directors of a non-Anglo-American firm signals poor corporate governance in the firm.

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

Dividend yield is the change in the share price of stock as traded in the public equity markets.

The problems that may arise due to the separation of ownership and management in large business organizations are known as:

The Board of Directors:

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