MAN 4720 FINAL
Firms develop innovations in all the following ways EXCEPT a. Through autonomous or induced strategic behavior. b. By acquiring other companies. c. Through cooperative strategies. d. Via divestiture of low-performing units.
Via divestiture of low-performing units.
90. Usually, large-block shareholders are considered to be those shareholders with at least ___ percent of the firm's stock. a. 5 b. 25 c. 50 d. 75
a. 5
130. Which of the following is TRUE of trends in Japan's corporate governance structure? a. Compensation of CEOs in both private and public companies is being tied more closely to observable performance goals. b. Increased regulation in the financial sector has increased the cost of mounting hostile takeovers. c. Banks' influence over corporations is increasing. d. The gap in compensation between CEOs in public and private companies is increasing.
a. Compensation of CEOs in both private and public companies is being tied more closely to observable performance goals.
____ involves internally developed incremental and radical innovations that result from deliberate efforts. a. Internal corporate venturing b. Autonomous strategic behaviors c. Bottom-up strategic behaviors d. Product championing
a. Internal corporate venturing
Isidore Security Services is a national provider of guard and security services for businesses. It has been in business for over 90 years, having been founded by one of Teddy Roosevelt's Rough Riders (Isidore O'Malley). Lately it has been losing clients to more aggressive and innovative firms offering remote security monitoring systems instead of a guard-based approach. The board of directors of Isidore Security Services is concerned that this downward trend may threaten the existence of this venerable firm and the jobs of its employees. a. This is an example of an established firm neglecting the opportunity-seeking aspect of strategic entrepreneurship. b. This example shows the dysfunctional aspects of unrestricted entrepreneurialism. c. This is an example of the lack of human capital hampering internal innovation. d. Isidore Security Services is suffering from the "novelty effect" wherein new firms are more attractive to clients/customers merely because they are new and not because they add value.
a. This is an example of an established firm neglecting the opportunity-seeking aspect of strategic entrepreneurship.
120. Ambrose Bierce, the CEO of DictionAry, has been paid a lump sum amounting to 3 years' salary because DictionAry has been bought in a hostile takeover by its main competitor. Ambrose received a. a golden parachute. b. a poison pill. c. greenmail. d. a silver handshake
a. a golden parachute.
Broadly, the Dodd-Frank Wall Street Reform and Consumer Protection Act seeks to a. align financial institutions' actions with society's interests. b. increase the number of foreign firms listing on U.S. stock exchanges. c. require CEOs to attest to the accuracy of their companies' financial reports. d. increase consumer protection in pharmaceutical products.
a. align financial institutions' actions with society's interests.
123. Historically, have been at the center of German corporate governance structure. a. banks b. institutional shareholders c. public pension funds d. government agencies
a. banks
An agency relationship exists when one party delegates a. decision-making responsibility to a second party. b. financial responsibility to employees. c. strategy implementation actions to functional managers. d. ownership of a company to a second party.
a. decision-making responsibility to a second party.
121. The repurchase at a premium of the target firm's shares that were acquired by the aggressor firm in a hostile takeover in exchange for an agreement that the aggressor will no longer target the company for takeover is called a. greenmail. b. a standstill agreement. c. crossing the palm with silver. d. a poison pill.
a. greenmail
100. A virtually exclusive reliance on financial controls may occur when outsider-dominated boards exist. This may lead to all of the following EXCEPT a. high executive turnover. b. increased diversification of the firm. c. excessive management compensation. d. reduction in R&D expenditure.
a. high executive turnover.
82. The top management team at Sierra Infusion is concerned about the declining performance of firms in their industry. The team members are becoming concerned about the security of their jobs at Sierra Infusion. At a meeting over dinner, the top management team agrees to go to the board of directors with a proposal for a. increased diversification of Sierra Infusion. b. the addition of outside directors to the board. c. increased shareholder participation in decision making. d. greater concentration on Sierra's core industry.
a. increased diversification of Sierra Infusion.
Panera Bread has innovated to improve the quality of its distribution system, to improve the quality of its bread dough, and to introduce new menu items. These are examples of a. incremental innovation. b. invention. c. imitation. d. the use of social capital.
a. incremental innovation.
A successful ____ innovation will be less risky but less profitable than a successful ____ innovation. a. incremental, radical b. radical, incremental c. alliance-generated, acquisition-generated d. acquisition-generated, alliance-generated
a. incremental, radical
114. The board of directors of CyberScope, Inc., is designing a stock option plan for its CEO that will motivate the CEO to increase the market value of the firm. Consequently, the board is a. setting the option strike price substantially higher than the current stock price. b. insuring that the strike price value of the options can be lowered if the organizational environment becomes more risky. c. having the stock option plan designed by insiders on the board of directors who are familiar with day-to-day operations of the firm. d. consulting accounting advisors to make sure that the plan transfers wealth to the CEO without immediately appearing on the balance sheet of CyberScope.
a. setting the option strike price substantially higher than the current stock price.
Because it replaces existing products and methods of production, entrepreneurship is a process of a. harnessing the human potential. b. creative destruction. c. creation of opportunity. d. exploitation of innovation.
b. creative destruction.
92. As ownership of the corporation is diffused, shareholders' ability to monitor managerial decisions a. increases. b. decreases. c. remains constant. d. is eliminated.
b. decreases.
Corporate governance is important to nations because a. shareholders want large stock returns. b. firms seek to invest in nations with national governance standards that are acceptable to them. c. company boards have lobbied for strong governance. d. the United States requires that other nations adopt its governance practices.
b. firms seek to invest in nations with national governance standards that are acceptable to them.
Managers may decide to invest in products that are not associated with the firm's current lines of business to increase the firm's level of diversification and decrease their employment risk. a. unsubstantial profits b. free cash flows c. marginal profits d. frozen assets
b. free cash flows
17. The market for corporate control may not be as efficient as previously thought as recent findings suggest that those firms targeted for takeover by active corporate raiders are a. usually on the verge of bankruptcy. b. typically under-performing their industry. c. often performing above their industry averages. d. always outperforming their industry.
c. often performing above their industry averages
Agency costs reflect all of the following EXCEPT costs. a. monitoring b. enforcement c. opportunity d. incentive
c. opportunity
118. If the market for corporate control were efficient as a governance device, then only ___ would be targets for takeovers. a. firms with unethical top executives b. firms earning above-average returns c. poorly performing firms d. over-valued firms
c. poorly performing firms
The level of entrepreneurial activity in a nation is ____ the nation's level of economic development. a. negatively related to b. independent of c. positively related to d. weakly related to
c. positively related to
Entrepreneurs tend to have all the following characteristics EXCEPT a. willing to take responsibility for projects. b. passionate. c. prefer certainly about projects. d. optimistic.
c. prefer certainly about projects
125. German executives are not dedicated to the maximization of shareholder value to the degree that is the case for executives in the UK and United States largely because a. the roles of CEO and chairperson of the board of directors are usually combined. b. large institutional investors control large blocks of stock. c. private shareholders and large institutional investors rarely have large ownership positions in firms. d. of the focus on stewardship-management in German firms rather than the financial performance focus of U.S. firms.
c. private shareholders and large institutional investors rarely have large ownership positions in firms.
107. The CEO and Chairman of the board of directors Alta Corp. is dismayed by a lack of effort and insights his directors provide during board meetings. The directors are all outsiders, experienced, and run their own successful firms. The CEO/chair genuinely seeks their greater involvement. What would you recommend? a. Requiring that the directors own stock in the company. b. Establishing a formal process to evaluate the board's performance. c. Electing a lead director. d. All of these options are correct.
. All of these options are correct.
The three types of innovative activity include all of the following EXCEPT a. invention. b. imitation. c. implementation. d. innovation.
. implementation.
133. The governance mechanism most closely connected with deterring unethical behaviors by holding top management accountable for the corporate culture is a. ownership concentration. b. the market for corporate control. c. executive compensation systems. d. the board of directors.
. the board of directors.
Entrepreneurship is the process by which individuals or groups identify and pursue ____ without being immediately constrained by the ____ they currently control. a. opportunities; resources b. opportunities; core competencies c. threats; resources d. threats; core competencies
.a. opportunities; resources
The use or application of entrepreneurship within an established firm is called a. corporate emergence. b. transformational leadership. c. exceptional R&D. d. corporate entrepreneurship.
.d. corporate entrepreneurship
105. Research suggests that boards of directors perform better if a. the CEO is also the chairperson of the board of directors. b. the board includes employees as voting members. c. the board is homogenous in composition. d. outside directors own significant equity in the organization.
.d. outside directors own significant equity in the organization.
Pet Care Companion Connection (PCCC) is an organization that trains persons with mild to moderate mental disabilities to care for pets in a pet boarding facility. This organization has been successful in providing a quality service for pet owners and a supportive training environment for their trainees. The tuition charged to trainees is only somewhat higher than the fee which day-care providers would charge for these individuals. Graduates of the program are qualified for employment by commercial kennels. PCCC is an example of a. taking advantage of a need in the marketplace. b. creative destruction of existing services for pet boarding. c. institutionalized entrepreneurship. d. internal corporate venturing.
a. taking advantage of a need in the marketplace.
Knowledge must be transferred to others in the firm to enhance the entrepreneurial competence of the firm. This requires that a. the receiving party have adequate absorptive capacity to learn. b. the communication process be highly intensive. c. the knowledge be broken into the smallest comprehensible units. d. training consultants be involved in every step of transference.
a. the receiving party have adequate absorptive capacity to learn.
104. Boards of directors are now becoming more involved in a. the strategic decision-making process. b. selecting new CEOs. c. the firm's tax issues. d. governmental relations.
a. the strategic decision-making process.
All of the following are consequences of the Sarbanes-Oxley Act EXCEPT a. a decrease in foreign firms listing on U.S. stock exchanges .b. internal auditing scrutiny has improved and there is greater trust in financial reporting. c. an increased number of IPOs (initial public offerings) are expected. d. Section 404 creates excessive costs for firms.
an increased number of IPOs (initial public offerings) are expected.
13. The board of directors of CamCell, Inc., wishes to design a CEO compensation plan that will align the personal interests of the CEO with the interests of the shareholders in long-term firm performance. The board wishes the CEO to take more short-term risks in order to achieve potentially higher long-term returns. Consequently, the board has decided on an incentive plan that involves payout based on the firm's performance five years in the future. CamCell is presently searching for a new CEO. Which of the following statements is true? a. This plan will be very attractive in luring candidates for the CEO position. b. CamCell may have to over-compensate its CEO in order to offset the personal risk a CEO would undertake under this plan. c. Institutional investors disapprove of long-term executive incentive plans and they may sell their blocks of stock in CamCell. d. This type of plan is likely to cause the CEO to underinvest in R&D in order to boost CamCell's long-term profitability.
b. CamCell may have to over-compensate its CEO in order to offset the personal risk a CEO would undertake under this plan.
129. is an important influence in Japanese corporate governance structures. a. Innovation b. Consensus c. Competition d. Individualism
b. Consensus
Amos Ball, Inc., is a printing company in Iowa that has been family owned and managed for three generations.Which of the following statements is most likely to be TRUE? a. Agency costs at Amos Ball are high. b. If research findings are valid, Amos Ball, Inc., will perform better if a family member is CEO than if an outsider is CEO. c. At Amos Ball, the opportunity for managerial opportunism is high. d. The functions of risk-bearing and decision making are separate at Amos Ball.
b. If research findings are valid, Amos Ball, Inc., will perform better if a family member is CEO than if an outsider is CEO.
124. James Abercrombie has a thriving consulting firm specializing in training boards of directors in decision-making skills. Mr. Abercrombie has had striking success in reducing conflict and hostility among directors and allowing boards to develop more cohesiveness. Mr. Abercrombie is considering expanding his consulting practice overseas. Which of the following statements is most likely to be TRUE? a. Mr. Abercrombie will have a large market in Japan because the culture highly values consensus decision making. b. Japanese firms will have little interest in Mr. Abercrombie's specialty because these skills are already practiced at a high level. c. German firms will not be interested in Mr. Abercrombie's services because the German system of decision making is based on authority and few conflicts emerge. d. Mr. Abercrombie should find significant need for his services in companies in transitional economies.
b. Japanese firms will have little interest in Mr. Abercrombie's specialty because these skills are already practiced at a high level
126. Which of the following statements is about corporate governance in Germany is FALSE? a. The Vorstand (management board) of a German corporation makes decisions about strategy and management. b. The Vorstand is elected by the firm's employees. c. Employees, union members, and shareholders appoint members to the Aufsichsrat (the supervisory tier of the board). d. Large institutional investors such as pension funds, and insurance companies are relatively insignificant owners of corporate stock.
b. The Vorstand is elected by the firm's employees.
Research suggests that _________ is needed to encourage entrepreneurial behavior. a. individualism rather than collectivism b. a balance between individualism and cooperative behavior c. collectivism rather than individualism d. limited autonomy and incentives
b. a balance between individualism and cooperative behavior
QuadroVax is investing heavily in research and development on new methods of vaccine development that would speed up the creation of vaccines for newly emerging viruses and to get these vaccines to the market rapidly. QuadroVax's shareholders can expect a. immediate wealth creation. b. a long wait for an uncertain payoff. c. a long wait for a high probability payoff. d. a large payoff in the short-term with rapidly decreasing wealth generation in the longer run.
b. a long wait for an uncertain payoff.
132. The CEO of Skyco, a publicly-traded company that has been earning below-average returns, has been publicly criticized by shareholders for persuading the board of directors to give her interest-free loans, for having the company purchase and furnish a lavish apartment in Paris for her personal use on her twice-yearly trips there, and for excessive stock options. The CEO's behavior may be indication of a. reasonably compensating a CEO. b. a weak board of directors. c. the laxity of institutional investors. d. the difference in risk propensity between owners and managers.
b. a weak board of directors.
101. Simon Leagreet, the Chairperson and CEO of L-EVA Industries, Inc., has long been the major power at L-EVA.A majority of the directors are concerned that while Mr. Leagreet has been responsible for the firm's earning above-average returns, he has been displaying a tendency toward personal extravagance at the firm's expense. In order to limit Mr. Leagreet's power, the board of directors plans to a. elect an insider as the lead director. b. appoint another individual as chairperson of the board of directors. c. require Mr. Leagreet to personally certify the firm's financial reports. d. reduce the size of the stock option package provided to Mr. Leagreet.
b. appoint another individual as chairperson of the board of directors.
AgroPharm is searching for a top-level executive. AgroPharm has marketed its products only to U.S. farmers and agribusinesses in the past. Now, the company plans to expand operations to Mexico and Central America in the next two years. To maximize the chances of success it is critical that the new executive a. be of Hispanic descent. b. have international experience. c. possess an advanced degree in animal science. d. have a background in managing agribusiness firms.
b. have international experience.
99. The New York Stock Exchange requires that the audit committee be a. available to comment to external analysts. b. headed by outside directors. c. liable for any illegal actions by the top management team. d. made up of CPAs with auditing experience.
b. headed by outside directors.
0. Managers in the United States receive compensation than managers in the rest of the world. a. equivalent b. higher c. lower d. more variable
b. higher
98. Generally, a board member who is a source of information about a firm's day-to-day activities is classified as a(n)director. a. lead independent b. inside c. related d. encumbered
b. inside
115. The market for corporate control serves as a means of governance when a. the firm is overpriced in the market. b. internal controls have failed. c. the corporation has greatly exceeded performance expectations. d. the top management team's interests and the owners' interests are aligned.
b. internal controls have failed.
GreenBox, a company that recycles paper products to make cardboard cartons, has introduced a new product that resists damage by moisture. GreenBox can expect that a. this innovation will resist competitors' attempts to imitate it. b. its investors will react positively to the introduction of the new product because of the potential for higher returns. c. its investors will react negatively because of the risk and cost entailed in introducing a new product. d. this will be recognized in the industry as a radical innovation.
b. its investors will react positively to the introduction of the new product because of the potential for higher returns.
70. In the United States, the fundamental goal of business is to a. ensure customer satisfaction. b. maximize shareholder wealth. c. provide job security. d. generate profits.
b. maximize shareholder wealth.
95. Research suggests that the activism of institutional investors such as TIAA-CREF and CalPERS a. increases shareholder value significantly. b. may not have a direct effect on firm performance. c. is so aggressive that boards of directors have become overly cautious. d. has weakened the effect of other governance mechanisms.
b. may not have a direct effect on firm performance.
The development of the original personal computer (PC) was a(n) ____ innovation at the time, whereas adding a different kind of whitening agent to a soap detergent in an example of a(n) ____ innovation. a. incremental; radical b. radical; incremental c. concentric; radical d. radical; concentric
b. radical; incremental
In contrast to managers' desires, shareholders usually prefer that free cash flows be a. used to diversify the firm. b. returned to them as dividends. c. used to reduce corporate debt. d. re-invested in additional corporate assets.
b. returned to them as dividends.
Compared to managers, shareholders prefer a. safer strategies with greater diversification for the firm. b. riskier strategies with more focused diversification for the firm. c. safer strategies with more focused diversification for the firm. d. riskier strategies with greater diversification for the firm.
b. riskier strategies with more focused diversification for the firm
111. The longer the focus of managerial incentive compensation, the greater the top-level managers. a. earnings potential for b. risks borne by c. incentives for d. potential tax burden for
b. risks borne by
Corporate governance revolves around the relationship between which two parties? a. shareholders and the board of directors b. shareholders and managers c. the board of directors and managers d. None of the these options are correct.
b. shareholders and managers
Successfully creating innovations through internal means requires a. a highly individualistic culture. b. significant spending on R&D. c. acquisitions of innovative firms. d. venture capital.
b. significant spending on R&D.
134. International Food Services (IFS) has a contract with the Marines to supply meals for its troops in Afghanistan and other foreign assignments. As a means of increasing profits, IFS has used substandard ingredients in these meals and has consistently lied about this practice during quality investigations by the Marines. Who is ultimately responsible for the corporate climate that resulted in this wrongdoing? a. the director of food service for IFS b. the board of directors of IFS c. the employees directly involved in the wrongdoing d. the head of contract services for the Marines
b. the board of directors of IFS
Ownership concentration is determined by both a. the number of stockholders and the parties they represent. b. the number of stockholders and total percentage of shares they own. c. the number of outside directors and the parties they represent. d. the number of outside directors and total percentage of shares they own.
b. the number of stockholders and total percentage of shares they own.
____ is one of the reasons for the differences in rates of entrepreneurship among different countries. a. Climate b. Competitiveness c. Culture d. Constitution
c. Culture
____ exist(s) when there is a need in the market that can be satisfied by new goods or services. a. Potentiality b. Market readiness c. Entrepreneurial opportunities d. Critical core competencies
c. Entrepreneurial opportunities
____ are individuals, acting independently or as part of an organization, who see an opportunity and then take risks to develop an innovation to exploit it. a. Leaders b. Innovators c. Entrepreneurs d. Transformative leaders
c. Entrepreneurs
102. Several members of the board of directors of American Textile Products (ATP) have proposed creating the position of lead director. What circumstances would most likely have initiated this proposal? a. ATP has been the initiator of several hostile takeovers in the last 2 years. b. The board has been successful in reducing the percentage of CEO pay that is composed of stock options. c. The CEO/chairperson of the board has been suspected of opportunistic behavior. d. The firm is traded on the New York Stock Exchange and must change its corporate governance to comply with the NYSE's new rules.
c. The CEO/chairperson of the board has been suspected of opportunistic behavior.
131. Which of the following is FALSE about corporate governance in China? a. The Chinese governance system may be tilting toward the Western model. b. With increasing frequency, the compensation of top executives of Chinese companies is closely related to prior and current financial performance of the firm. c. The state still uses direct and/or indirect controls to influence the strategies employed by most firms. d. Firms with higher state ownership tend to have lower market value and more volatility in those values over time.
c. The state still uses direct and/or indirect controls to influence the strategies employed by most firms.
Which of the following is true? For firms to be entrepreneurial, they require a culture with a. an emphasis on individualism in Western nations and an emphasis on collectivism in Eastern nations. b. an exceptionally high level of collectivism. c. a balance of individualism and collectivism. d. an exceptionally high level of individualism.
c. a balance of individualism and collectivism.
77. The separation between firm ownership and management creates a(n) relationship. a. governance b. control c. agency d. dependent
c. agency
Innovation creates a(n): a. opportunity for a new product or process. b. new product or process. c. commercial product. d. idea for potential exploitation.
c. commercial product.
103. Given the demands for greater accountability and improved performance, which of the following is NOT a voluntary change many boards of directors have initiated? a. moving toward having directors from different backgrounds b. strengthening the internal management and accounting control systems c. compensating directors with stock options rather than with fixed remuneration d. establishing and using formal processes to evaluate the board's performance
c. compensating directors with stock options rather than with fixed remuneration
According to Peter Drucker, the primary goal of innovation is to a. promote social well being. b. increase the number of jobs. c. create wealth. d. support national economies.
c. create wealth.
. Institutional owners are a. shareholders in the large institutional firms listed on the New York Stock Exchange. b. banks and other lending institutions that have provided major financing to the firm. c. financial institutions such as mutual funds and pension funds that control large-block shareholder positions. d. prevented by the Sarbanes-Oxley Act from owning more than 50 percent of the stock of any one firm.
c. financial institutions such as mutual funds and pension funds that control large-block shareholder positions
If the firm's current employees are well-trained in their jobs, but also have other knowledge, skills, and abilities, these employees have a. social capital .b. entrepreneurial capabilities. c. high absorptive capacity to learn. d. intellectual slack.
c. high absorptive capacity to learn.
Products developed through ____ are often offered at lower prices without as many features than products developed through ____. a. innovation, imitation b. imitation, invention c. imitation, innovation d. innovation, invention
c. imitation, innovation
Innovations that involve significant technological breakthroughs and create new knowledge a. build incrementally on the firm's existing technologies and knowledge. b. are the most common type of innovation. c. involve substantial uncertainty and risk. d. typically have clear market opportunities.
c. involve substantial uncertainty and risk.
76. Complete the following: In small firms, managers often own a ______separation between ownership and managerial control. a. small; small b. small; large c. large; small d. large; large
c. large; small
Managerial employment risk is the a. risk that managers will behave opportunistically. b. risk undertaken by managers to earn stock options. c. managers' risk of job loss, loss of compensation, and/or loss of reputation. d. risk managers will not find a new top management position if they should be dismissed.
c. managers' risk of job loss, loss of compensation, and/or loss of reputation.
Panera Bread develops and produces its own dough-based products, but it works with manufacturing partners to create new soups. Panera Bread is therefore a. increasing its costs and reducing its potential to succeed. b. engaged in internal corporate venturing. c. pursuing innovation through both internal and cooperative strategies. d. not an innovative company.
c. pursuing innovation through both internal and cooperative strategies.
06. One means that is considered to improve the effectiveness of outside directors is a. mandating that all outside directors be drawn from government or academia rather than industry. b. requiring that outside directors be former executives of the firm. c. requiring outside directors to own significant equity stakes in the firm. d. requiring that outside directors be truly objective by having no ownership interest in the firm.
c. requiring outside directors to own significant equity stakes in the firm.
71. In the United States, a firm's key stakeholder(s) is(are) the a. government. b. executives. c. shareholders. d. customers.
c. shareholders.
Internal corporate venturing does NOT involve a. autonomous strategic behavior. b. induced strategic behavior. c. strategic alliances. d. product champions.
c. strategic alliances.
97. Which of the following is a FALSE statement about corporate governance? a. Governance is used to establish order between parties whose interests may be in conflict. b. Corporate governance mechanisms sometimes fail to monitor and control top managers' decisions. c. Corporate governance mechanisms can be in conflict with one another. d. Corporate governance is best achieved with a board of directors with strong ties to management.
d. Corporate governance is best achieved with a board of directors with strong ties to management.
116. Agricultural Chemicals, Inc., was the target of a hostile takeover 6 months ago. The CEO and the top executives successfully fended off the takeover and are concentrating on strategies to improve the performance of the firm. Which of the following is most likely to be TRUE? a. Hostile takeover attempts are so common that they do not reflect negatively on the firm's performance. They are more a function of general market conditions. b. The fact that a hostile takeover has occurred is proof that the firm was under-performing. c. Research shows that once a hostile takeover has been defeated, the firm is safe from other hostile takeover attempts for many years. d. The CEO and top executives should not consider their jobs secure.
d. The CEO and top executives should not consider their jobs secure.
112. Which of the following reasons would NOT explain the difficulty of determining appropriate executive compensation? a. The decisions made by top-level managers are typically complex and nonroutine. b. An executive's decisions often affect firm performance only over the long run. c. A number of factors intervene between top-level management decisions and firm performance (e.g., unpredictable economic, social, or legal changes). d. The compensation committee may not have comprehensive firm performance data.
d. The compensation committee may not have comprehensive firm performance data.
The ownership of major blocks of stock by institutional investors have resulted in all of the following EXCEPT a. making CEOs more accountable for their performance. b. challenges to the decisions of boards. c. focusing attention on ineffective boards of directors. d. a direct effect on firm performance.
d. a direct effect on firm performance.
122. A hostile takeover defense wherein the target firm makes its stock less attractive to a potential acquirer is called a. greenmail. b. a standstill agreement. c. crossing the palm with silver. d. a poison pill.
d. a poison pill.
27. Japanese keiretsu are a. management structures related to total quality management systems. b. company unions, which are a type of governance system c. the banks owing the largest shares of stock in the firm. d. a system of cross-shareholding among firms.
d. a system of cross-shareholding among firms.
09. The interests of multinational corporations' shareholders may be best served when there is a. a uniform compensation plan for all corporate executives, United States and foreign alike. b. executive compensation that is primarily based on long-term performance. c. elevation of foreign executive compensation to U.S. levels. d. a variety of compensation plans for executives of foreign subsidiaries.
d. a variety of compensation plans for executives of foreign subsidiaries
128. In Japan, the principal source of the active monitoring of large companies comes from a. boards of directors. b. stock brokerage companies. c. the government. d. banks.
d. banks.
119. All of the following statements are TRUE about the use of defense tactics by the target firm during a hostile takeover EXCEPT a. defense tactics are usually beneficial for the executives of the target firm. b. defense tactics are opposed by institutional investors. c. defense tactics vary in their effectiveness as a defense to takeovers. d. defense tactics make the costs of a takeover lower.
d. defense tactics make the costs of a takeover lower.
The number of patents held by an organization is a rough guide to the a. effective use of organizational politics. b. future success of an initial public offering. c. amount of venture capital a firm will be able to attract. d. level of innovation in a firm.
d. level of innovation in a firm.
Research shows that internationally diversified firms tend to be ____ than domestic-only firms. a. less profitable b. more innovative c. less technologically advanced d. more likely to have an individualistic culture
d. more likely to have an individualistic culture
Roland has developed and patented an inexpensive and organic way to enhance the fertility of clay soils without the addition of chemical fertilizers. But established agricultural chemical companies have rejected his proposals. After six months of promoting his invention during his time off from his regular job, Roland has decided to set his dream aside. Roland lacks a key characteristic of successful entrepreneurs, which is a. the ability to identify opportunities. b. a corporate sponsor. c. financial slack. d. passion for his invention.
d. passion for his invention.
108. Executive compensation is a governance mechanism that seeks to align managers' and owners' interests through all of the following EXCEPT a. bonuses b. long-term incentives such as stock options. c. salary. d. penalties for inadequate firm performance.
d. penalties for inadequate firm performance.
A major conflict of interest between top executives and owners, is that top executives wish to diversify the firm in order to , whereas owners wish to diversify the firm to. a. generate free cash flows; reduce the risk of total firm failure b. increase the price of the firm's stock; increase the dividends paid out from free cash flows c. reduce the risk of total firm failure; reduce their total portfolio risk d. reduce their employment risk; increase the company's value
d. reduce their employment risk; increase the company's value
69. Corporate governance is all of the following EXCEPT a. mechanisms used to determine and control the strategic direction and performance of organizations. B. a means to establish and maintain harmony between owners and top managers whose interests may conflict. c. ensuring that top managers' interests are aligned with the interests of stockholders. d. resolve conflicts among corporate employees.
d. resolve conflicts among corporate employees.
All of the following are areas covered by the Dodd-Frank Wall Street Reform and Consumer Protection Act EXCEPT a. consumer protection. b. CEO compensation. c. regulation of derivatives. d. retirement accounts.
d. retirement accounts.
The risks of international entrepreneurship include all the following EXCEPT a. unstable foreign currencies. b. problems with market efficiencies .c. limitations on market size. d. strong "buy-domestic" programs.
d. strong "buy-domestic" programs.
96. Monitoring by shareholders is usually accomplished through a. management consultants. b. government auditors. c. the firm's top managers. d. the board of directors.
d. the board of directors.
Which of the following is NOT an internal governance mechanism? a. the board of directors b. ownership concentration c. executive compensation d. the market for corporate control
d. the market for corporate control
Product diversification provides two benefits to managers that do not accrue to shareholders: and . a. greater experience in a wider range of industries; lessening of managerial employment risk b. the manager frequently invests in the acquired firm, which allows him or her extensive profits; the manager can frequently buy excess assets divested by the acquired firm c. the manager's supervisory needs are lowered; the manager is allowed greater time to oversee a wider range of activities d. the opportunity for higher compensation through firm growth; a reduction in managerial employment risk
d. the opportunity for higher compensation through firm growth; a reduction in managerial employment risk
