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Terms in this set (51)Which of the following have been found to be ethical norms in business? (may choose multiple) Self Interest Reciprocity, Honesty, Fairness Corporate governance addresses the __________ problem, which underscores the risk of delegating responsibility and control to individuals who may not have the firm's best interest in mind. SEC financial principal-agent Economist Michael Porter and many others argue that the value of public stock companies is too narrowly defined in terms of _________, leading to scandals and economic crises. environmental protection financial performance The ________ and __________ commission is a federal regulatory agency whose task it is to oversee stock trading and enforce federal securities laws. securities , exchange The mechanism used to guide a company toward meeting its strategic goals within the bounds of the law is known as stakeholder impact analysis corporate governance In general, women and minorities a) hold many top level management positions in Fortune 500 companies. d) are underrepresented on corporate boards. Optics Incorporated, a publicly-traded eyewear business, places profits ahead of all other performance metrics. This practice (may choose multiple) a) fails to take into account the idea of corporate social responsibility. a) fails to take into account the idea of corporate social responsibility. In a ________________ , a single investor or group of investors buys, with the help of borrowed money, the outstanding shares of a publicly traded company in order to take it private. leveraged buyout According to agency theory, conflict such as the principal-agent problem are considered __________ issues. moral legal In regard to the public stock company, limited liability means that a) the company does not have any
responsibility to earn a profit on invested capital. c) investors are not responsible for any debts incurred by the company, and are only at risk of losing the invested capital. The shared value creation framework encourages managers to focus on both ___________ and __________ needs. social social , economic Which of the following statements is correct in regarding the interests of principals and agents? a) Principals want to maximize corporate social responsibility initiates. d) Agents may be more interested in
personal goals, such as maximizing their compensation or gaining power. The shared value creation framework is a tool intended to help businesses secure capital investments. benefit all stakeholders, not just shareholders. When facing an ethical dilemma, a manager can a) determine whether he or she could comfortably defend the action to the public. a) determine whether he or she could
comfortably defend the action to the public. The idea that a corporation is simply a collection of legal contracts is known as the principal-agent problem. agency theory. The ideas of corporate social responsibility and stakeholder strategy are particularly prevalent in Europe. Europe. A fiduciary responsibility is a) a legal duty to act in another party's interests. a) a legal duty to act in another party's interests. To achieve board independence, experts in corporate governance recommend that _________ more than 1 third of the board is female. less than one third of the board is made up of insiders. Corporate governance is a system of legal and ethical issues. Checks and balances What are the two significant issues regarding the CEO pay debate? a) the relationship between firm performance and CEO pay a) the relationship between firm performance and CEO pay Following the rise of institutional investors, the use of poison pills to avoid hostile takeover has grown steadily. become rare. Narrowly defining public stock companies in terms of financial performance can lead to more accurate accounting. black swan events In order to reconcile economic and social needs, managers should focus on a) making products affordable for the poorest socioeconomic groups in order to improve standards of living a) making products
affordable for the poorest socioeconomic groups in order to improve standards of living Which of the following are examples of moral hazard (select 3)? a) A company dumping pollution into a local lake that must be cleaned using taxpayer money. a) A company dumping pollution into a local lake that must be cleaned using taxpayer money. Financial statements by public companies must divulge insider information. be audited by certified public accountants. What are the four characteristics of a public stock company that make it an attractive corporate form? a) limited liability for investors a) limited liability for investors Social consequences of business activities, including pollution, energy loss, and dangerous accidents, are known as internal costs. externalities A job seeker claiming to have extensive computer programming experience when their knowledge of the subject is minimal would be an example of intuitive recruitment adverse selection An executive can legally earn a significant profit from stock options if he or she commits to purchasing the maximum amount of shares allowed the firm performs well and the actual price per share exceeds the negotiated strike price If a company is poorly managed, its stock price may fall low enough for the firm to become a target for a ________ takeover. hostile The primary purpose of the board of directors is to ensure that individual work tasks are completed
time. general strategic oversight and guidance When agents are better informed that principals, a phenomenon known as ____________, the principal-agent problem may be exacerbated. unbalanced knowledge information asymmetry By taking a __________ position in Abacus, Mr. Paulson made more than $1 Billion in profits while his clients suffered huge losses. left short Adverse selection is particularly a problem in privately-owned businesses. team-based environments The primary difference between outside and inside members of the board of directors is a) outside directors manage employees outside of the US, whereas inside directors handle US-based operations only. c) outside directors are not employees of the firms, whereas inside directors are. Employees that work in organizations that emphasize ethical behavior are more likely to engage in moral hazard are more likely to act ethically Under agency theory, a manager should seek to align ________ between principals and agents to minimize opportunism. disciplinary actions incentives
In line with stakeholder theory, which of the following strategic actions would NOT, according to Michael Porter, connect economic and societal needs? Offer financial support to local politicians. Offer financial support to local politicians. Incentives that are too high-powered, such as an outsized bonus may cause ___________ individuals to use information symmetries to their own benefit. individuals to get distracted from strategic activities which may negatively impact job performance. The interests of inside directors typically align with those of senior management senior management According to agency theory, which of the following managerial functions can be used to avoid adverse selection and moral hazard? (can choose multiple) organization organization , control Managers who act upon secret company information for personal gain, such as by trading stocks based on the knowledge of future initiatives, are guilty of wore fraud ...
The code of professional conduct based on societal norms and expectations is known as societal reconciliation business ethics In comparison to other countries, the United States ranks _______ in terms of its acceptance of shareholder capitalism. toward the top near the middle The right to buy a company's stock at a predetermined price sometime in the future is know as a(n) stock option stock option Additional functions of a board of directors beyond general strategic oversight include conducting background checks on all potential employees. ensuring that the firm's accounting practices and reports are accurate. In 2014, 25% of GE's Board were women. Compared to other Fortune 500 companies, the Board of Directors at GE is ____________ in gender. very small. fairly diverse A situation in which one party has an incentive to shirk their responsibility because the costs will fall to the other party is known as moral hazard. moral hazard A board of directors is elected to represent the interests of society as a whole shareholders The idea of corporate social responsibility (CSR) suggest that a firm's obligations should always be
focused on increasing the price of the firm's shares by selling higher volume. exceed the traditional imperative to increase profits. The relationship between CEO pay and job performance has been shown to be very
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What is a true statement about the board members of a corporation quizlet?What is a true statement about the board members of a corporation? They have a duty of care and loyalty to oversee the management of the firm.
Which of the following is a major drawback of public stock companies according to Michael Porter and others quizlet?Which of the following is a major drawback of public stock companies, according to Michael Porter and others? They prioritize financial performance over all else. The ideas of corporate social responsibility and stakeholder strategy are particularly prevalent in ______.
What are the four characteristics of a public stock company that make it an attractive corporate form quizlet?The public stock company enjoys four characteristics that make it an attractive corporate form:. Limited liability for investors.. Transferability of investor ownership.. Legal personality.. Separation of legal ownership and management control.. |
The primary difference between outside and inside members of the board of directors is that ______.
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