Question 1

Which of the following unethical behaviors violates the rights of competitors and, when government officials are involved, the right of citizens to expect that government officials will act in the best interests of the local community or nation?

Accepted Answer

A)   Information asymmetry
B)   Utilitarianism
C)   Self-dealing
D)   Greenmail
E)   CorruptionF) B) and D)
G) B) and C)

Question 2

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 for him than required and he has not told the CEO about this, even though there are other departments that need 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 constraintF) A) and E)
G) D) and E)

Question 3

Which of the following statements is true in the context of stock-based compensation?

Accepted Answer

A)   Stock options usually result in information asymmetry.
B)   Stock-based compensation schemes for executives can align management and stockholder interests.
C)   A cause for concern is that stock options are often granted at extremely high strike prices.
D)   Critics deny that stock-based compensations motivate managers to improve company performance.
E)   Granting more stock options often results in an increase in stockholder equity.F) B) and E)
G) A) and E)

Question 4

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 targets for divisional managers
E)   Make sure the audited financial statements present a true picture of the company's financial situationF) A) and B)
G) B) and E)

Question 5

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

Accepted Answer

A)   CEOs also earn from the stock options that they grant to managers.
B)   Empire building helps CEOs increase their earnings.
C)   CEO compensation is 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.F) None of the above
G) A) and E) C

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is NOT an example of ways to monitor agents, evaluate their performance, and take corrective action?

Accepted Answer

A)   Board of directors
B)   Mandatory filing of detailed financial statements
C)   Internal control systems
D)   Reduction of information asymmetry
E)   On-the-job consumptionF) A) and B)
G) All of the above

Question 8

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 9

Only external stakeholders, such as customers, suppliers and creditors (including banks and bondholders), have an exchange relationship with a company.

Accepted Answer

A) True 
 B)False

Question 10

Requiring an independent board of directors that is willing to hold top managers accountable for self-dealing and can verify the information managers provide is an example of which kind of ethical principle?

Accepted Answer

A)   Organization culture and leadership
B)   Decision-making processes
C)   Strong corporate governance
D)   Moral courage
E)   Hiring and promotionF) C) and E)
G) A) and B)

Question 11

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 companyF) C) and D)
G) B) and E)

Question 12

Which of the following statements is true in the context of financial statements and auditors?

Accepted Answer

A)   The information contained in the financial statements can enable a stockholder to calculate the ROIC of a company in which he or she invests.
B)   Publicly traded companies in the United States are not required to file quarterly or annual reports with the SEC.
C)   So far, there have been no cases in which auditors were found cooperating with companies to misrepresent financial information.
D)   The SEC requires that the accounts be audited by a committee formed by the board members and senior employees of the company.
E)   Sarbanes-Oxley Act in 2002 barred CEOs and CFOs from endorsing their company's financial statements.F) B) and E)
G) All of the above

Question 13

The regulations instituted by the United States governmental organization known as the SEC make sure that managers do not misrepresent financial information and require that the accounts be audited by an independent, accredited accounting firm are also instituted in most other developed nations.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is true of stakeholders?

Accepted Answer

A)   Creditors are examples of internal stakeholders.
B)   Stakeholders do not engage in an exchange relationship with their company.
C)   Stockholders are internal stakeholders that provide an enterprise with risk capital.
D)   The goals of different stakeholder groups within a company are the same and therefore do not lead to any conflicts.
E)   It is mandatory for a company to satisfy the claims of all stakeholders.F) A) and C)
G) A) and E)

Question 15

Which of the following are an example of an external stakeholder in a company?

Accepted Answer

A)   Stockholders
B)   Managers
C)   Employees
D)   Customers
E)   Board membersF) All of the above
G) C) and D) D

Question 16

The stress of not knowing for sure if the agent is acting in his or her best interests or knowing for sure if the agent is using the resources to which he or she has been entrusted as effectively and efficiently as possible is caused by the performance ambiguity between a principal and agent.

Accepted Answer

A) True 
 B)False  True

Question 17

Describe the four types of governance mechanisms that principals use to deal with agency problems.

Accepted Answer

Agency problems in organizations are wel...

Question 18

Which of the following statements is true in the context of principal-agent relationships?

Accepted Answer

A)   The agency relationship is confined to the top management and does not continue down the hierarchy within the company.
B)   Agents almost always have more information about the resources they are managing than the principals do.
C)   Information asymmetry can make it easier for principals to measure how well an agent is performing.
D)   In a principal-agent relationship, the decision-making power rests entirely with the principals.
E)   The relationship between the company and the suppliers is an example of a principal-agent relationship.F) A) and B)
G) B) and E)

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements concerning profitability and profit growth is NOT true?

Accepted Answer

A)   Attaining future profit growth may require investments that reduce the current rate of profitability.
B)   Managers must find the right balance between profitability and profit growth.
C)   Too much emphasis on current profitability at the expense of profit growth can make an enterprise less attractive to shareholders.
D)   Satisfying the claims of other key stakeholder groups happens at the risk of decreased profitability and profit growth.
E)   Too much emphasis on profit growth can reduce profitability and make an enterprise less attractive to shareholders.F) None of the above
G) All of the above

Exam 11: Corporate Governance, Social Responsibility, and Ethics

Which of the following unethical behaviors violates the rights of competitors and, when government officials are involved, the right of citizens to expect that government officials will act in the best interests of the local community or nation?

Correct Answer
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Correct Answer
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Which of the following statements is true in the context of stock-based compensation?

Correct Answer
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Which of the following is NOT a responsibility of the board of directors?

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

Correct Answer
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C

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

Correct Answer
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Which of the following is NOT an example of ways to monitor agents, evaluate their performance, and take corrective action?

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

Correct Answer
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Only external stakeholders, such as customers, suppliers and creditors (including banks and bondholders), have an exchange relationship with a company.

Correct Answer
verified

Requiring an independent board of directors that is willing to hold top managers accountable for self-dealing and can verify the information managers provide is an example of which kind of ethical principle?

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

Correct Answer
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Which of the following statements is true in the context of financial statements and auditors?

Correct Answer
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The regulations instituted by the United States governmental organization known as the SEC make sure that managers do not misrepresent financial information and require that the accounts be audited by an independent, accredited accounting firm are also instituted in most other developed nations.

Correct Answer
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Which of the following is true of stakeholders?

Correct Answer
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Which of the following are an example of an external stakeholder in a company?

Correct Answer
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D

The stress of not knowing for sure if the agent is acting in his or her best interests or knowing for sure if the agent is using the resources to which he or she has been entrusted as effectively and efficiently as possible is caused by the performance ambiguity between a principal and agent.

Correct Answer
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True

Describe the four types of governance mechanisms that principals use to deal with agency problems.

Correct Answer
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Agency problems in organizations are wel...
View Answer

Which of the following statements is true in the context of principal-agent relationships?

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

Correct Answer
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Which of the following statements concerning profitability and profit growth is NOT true?

Correct Answer
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Exam 11: Corporate Governance, Social Responsibility, and Ethics

Which of the following unethical behaviors violates the rights of competitors and, when government officials are involved, the right of citizens to expect that government officials will act in the best interests of the local community or nation?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is true in the context of stock-based compensation?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedC

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

Correct AnswerverifiedShow Answer

Which of the following is NOT an example of ways to monitor agents, evaluate their performance, and take corrective action?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Only external stakeholders, such as customers, suppliers and creditors (including banks and bondholders), have an exchange relationship with a company.

Correct AnswerverifiedShow Answer

Requiring an independent board of directors that is willing to hold top managers accountable for self-dealing and can verify the information managers provide is an example of which kind of ethical principle?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements is true in the context of financial statements and auditors?

Correct AnswerverifiedShow Answer

The regulations instituted by the United States governmental organization known as the SEC make sure that managers do not misrepresent financial information and require that the accounts be audited by an independent, accredited accounting firm are also instituted in most other developed nations.

Correct AnswerverifiedShow Answer

Which of the following is true of stakeholders?

Correct AnswerverifiedShow Answer

Which of the following are an example of an external stakeholder in a company?

Correct AnswerverifiedD

The stress of not knowing for sure if the agent is acting in his or her best interests or knowing for sure if the agent is using the resources to which he or she has been entrusted as effectively and efficiently as possible is caused by the performance ambiguity between a principal and agent.

Correct AnswerverifiedTrue

Describe the four types of governance mechanisms that principals use to deal with agency problems.

Correct AnswerverifiedAgency problems in organizations are wel...View AnswerShow Answer

Which of the following statements is true in the context of principal-agent relationships?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements concerning profitability and profit growth is NOT true?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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C

Correct Answer
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Correct Answer
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D

Correct Answer
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True

Correct Answer
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Agency problems in organizations are wel...
View Answer

Correct Answer
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Correct Answer
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