BCOR 460 Chap 5

Which of the following correctly describe the information used for comparing the performance of public companies based on accounting profitability?

- The information is derived from such data as income statements and balance sheets. - The relative performance is evaluated using standardized financial metrics. - The information is filed in a 10-K report.

Which statements correctly describe the ESG criteria?

- They evaluate firms on standards that go beyond financial results. - They include environmental, social, and governmental aspects.

Optics Incorporated, a publicly traded eyewear business, places profits ahead of all other performance metrics. This practice does which of the following?

- conforms to the traditional notion of shareholder capitalism - fails to take into account the idea of corporate social responsibility

What are the three defining problems faced by capitalism today according to strategy scholar Rebecca Henderson?

- economic inequality - beleaguered - institutions climate change

What is meant by the statement that company managers are agents of shareholders?

Managers are hired to run the day-to-day business even though stockholders own the enterprise.

Which of the following is a major drawback of public stock companies, according to many economists?

They prioritize financial performance over all else.

When competitive advantage is assessed from an analysis of publicly available data, a firm measures its ______.

accounting profitability

governance

addressing factors related to business ethics, legal compliance, transparency, shareholder democracy, and board independence

What is shareholder capitalism?

an economic system in which the owners of shares in a public company are the company's legal owners and the providers of risk capital

In order to ensure that a firm is implementing the triple-bottom-line approach successfully, managers must Blank______.

audit the company's results in fulfilling its social and ecological obligations

Companies are required to provide Blank______ to shareholders, which are used in determining a firm's competitive advantage.

benchmarks

Narrowly defining public stock companies in terms of financial performance can lead to Blank______.

black swan events

When a firm goes bankrupt, shareholders ______.

cannot recover their risk capital

Public companies are required by law to release detailed accounting data, which enables ______.

comparative analysis of firms

The idea of corporate social responsibility (CSR) suggests that a firm's obligations should Blank______.

exceed the traditional imperative to increase profits

Social consequences of business activities, including pollution, energy loss, and dangerous accidents, are known as ______.

externalities

Many strategy scholars argue that the value of public stock companies is too narrowly defined in terms of ______, leading to scandals and economic crises.

financial performance

In regard to the public stock company, limited liability means that ______.

investors are not responsible for any debts incurred by the company and are only at risk of losing their invested capital

A public stock company is considered by law to be an entity with legal rights and obligations. This is known as Blank______.

legal personality

When a firm does favorably compared to similar firms, it is said to ______.

outperform

Return on invested capital, return on assets, and return on revenue are examples of the ______ most commonly used in strategic management to conduct direct performance comparisons between different companies.

profitability ratios

social

pursuing policies that promote diversity, equity, health and safety, human rights, and inclusion

From the view of a shareholder, the measure of competitive advantage that matters most is return on ______.

risk capital

environmental

working to address climate change and other sustainability goals

According to the efficient-market hypothesis, information about which of the following is embedded in a stock price?

- expectations of the firm's future performance - a firm's current state - a firm's past

What are the four characteristics of a public stock company that make it an attractive corporate form?

- limited liability for investors - legal personality - transferability of investor ownership - separation of ownership and management control

In order to determine market capitalization, one multiplies which of the following together?

- share price - number of outstanding shares

The shared value creation framework encourages managers to focus on which of the following needs?

- social - economic

In their annual filing with the Securities and Exchange Commission, public companies in the United States must report which of the following?

- the total return to shareholders - benchmarks

Our understanding of the firm's purpose has shifted over time. Place the views of the firm's purpose in historical order, with the most recent view at the top.

1. Creating Value 2. Pursuing corporate social responsibility 3. Maximizing profits

The firm's accounting metrics, ability to create shareholder value, and ability to generate economic value tend to be ______.

correlated