MGT 429 Chpt 11 quiz

Which of the following is not correct in a principal-agent relationship? Agent is the person that delegates decision-making authority or control over the other person. Agent is the person to whom authority is delegated. Agents may make decisions on behalf of principals. Agents may have and pursue goals that are different from those of principals

Agent is the person that delegates decision-making authority or control over the other person.

Which of the following statement is not true regarding the board of directors. They are elected by stockholders to represent the interest of stockholders. They are charged with the responsibility to oversee and control the behavior of top managers. They usually consist of a large number of outside members and a small number of inside members. CEO duality is the most effective way to use the board of directors as a governance mechanism.

CEO duality is the most effective way to use the board of directors as a governance mechanism.

The CEO behavior described in the Youtube video titled "CEO Perks Rise as Pay Falls" can be related to which of the following agency problems? Profit maximization Empire building On-the-job consumption Excessive executive compensation

On-the-job consumption

Which of the following is true of stakeholders? Creditors are examples of internal stakeholders. Stakeholders do not engage in an exchange relationship with their company. Stockholders are internal stakeholders that provide an enterprise with risk capital. The goals of different stakeholder groups within a company are the same, and therefore do not lead to any conflicts.

Stockholders are internal stakeholders that provide an enterprise with risk capital.

To combat internal agency problems, companies may use internal governance mechanisms including strategic control systems. employee incentives. balanced score cards. all of the above.

all of the above.

The unethical behavior of substandard working conditions violates the interest of stockholders. employees. suppliers. local communities.

employees.

In the article "Self-Dealing at Computer Associates" (Chapter 11 page357) the behavior conducted by the three top managers benefited the company's shareholders. enriched the three executives themselves. was an effective way to use stock-based compensation. likely benefited all the stakeholders of the company.

enriched the three executives themselves.

T/F A union and the general public are examples of internal stakeholders.

false

When corporate CEOs and top managers use their power and control over funds to satisfy their personal desires for wealth or status, it is called on-the-job consumption greenmail information asymmetry profit maximization

on-the-job consumption

When developing and implementing strategies a company must consider the claims of its shareholders customers employees stakeholders

stakeholders

Corporate governance is primarily concerned with the agency relationship between employees and customers. suppliers and creditors. governments and unions. stockholders and managers.

stockholders and managers.

The unethical behavior of information manipulation violates the interest of stockholders. employees. customers. local communities.

stockholders.

To make sure that managers do not misrepresent their firm's financial information, the SEC requires that the accounts be audited by an independent and accredited accounting firm. However the auditor is not independent of the client firm if the auditing firm has other business dealings with the client firm at the same time. the auditing firm's CEO also serves as the chairperson of the auditing firm's board. the client firm's CEO also serves as the chairperson of the client firm's board. all of the above.

the auditing firm has other business dealings with the client firm at the same time.

T/F Stockholders receive a return on their investment in a company's stock from dividend payments and capital appreciation.

true

T/F: Agency theory is used to explain the relationship between stockholders and corporate managers, and between upper-level managers and the lower-level managers they supervise.

true

T/F: Strategic control systems are the primary governance mechanisms established within a company to reduce the scope of the agency problem between levels of management.

true