Question 1

​In countries that have weak formal legal and regulatory institutions,concentrated ownership and control:

Accepted Answer

A)  ​Minimizes the occurrence of principal-principal conflicts. 
B)  ​Mostly benefits minority shareholders. 
C)  ​Minimizes the occurrence of principal-agent conflicts. 
D)  ​Are likely to become more diffuse. 
A)  ​Minimizes the occurrence of principal-principal conflicts. 
B)  ​Mostly benefits minority shareholders. 
C)  ​Minimizes the occurrence of principal-agent conflicts. 
D)  ​Are likely to become more diffuse. C

Question 2

At this present time,what do you see happening in regard to privatization of SOEs?

Accepted Answer

As covered in the chapter,there was a trend toward privatization but your students may question what will likely happen in the future.During the Great Recession of 2008-2009,Western governments in an effort to rescue ailing firms nationalized numerous private firms and turned them into state-owned enterprises (SOEs).Today SOEs represent approximately 10% of global GDP.Even in developed economies,they command 5% of GDP.Anchored by SOEs,China over the past three decades has grown its GDP by 9.5% per year.SOEs represent 80% of China's stock market capitalization.But China is not alone.In Russia,the figure is 62%,in Brazil 38%,and in Norway 38%.SOEs include some of the largest oil and gas companies (such as Sinopec),the biggest telecom service provider (China Mobile),and the biggest ports operator (Dubai Ports).In 2014,they also represented six of the top ten most-profitable firms globally (measured by the amount of profits): Fannie Mae and Freddie Mac of the United States,ICBC of China,Gazprom of Russia,China Construction Bank,and Agricultural Bank of China

Question 3

​From a corporate governance standpoint,a narrow scope may be indicative of managers' empire-building and risk reduction.

Accepted Answer

A) True 
 B)False  False

Question 4

Strategists should:

Accepted Answer

A)  Understand the nature of principal-agent and principal-principal conflicts to create better governance mechanisms. 
B)  Develop firm-specific capabilities to differentiate on governance dimensions. 
C)  Understand the rules,anticipate changes,and be aware of differences,especially when doing business abroad. 
D)  All of the above. 
A)  Understand the nature of principal-agent and principal-principal conflicts to create better governance mechanisms. 
B)  Develop firm-specific capabilities to differentiate on governance dimensions. 
C)  Understand the rules,anticipate changes,and be aware of differences,especially when doing business abroad. 
D)  All of the above.

Question 5

​"Capitalism without risk of failure becomes socialism" is the essence of the moral hazard of government bailouts.

Accepted Answer

A) True 
 B)False

Question 6

The market for private equity involves going private by tapping into private equity.

Accepted Answer

A) True 
 B)False

Question 7

What is the potential relationship between concern about a board dominated by insiders and concern about excess executive pay?

Accepted Answer

It should be obvious that if a board con

Question 8

Three decades of privatization suggest all of the following EXCEPT:

Accepted Answer

A)  Privatization to insiders helps improve the performance of small firms. 
B)  In large corporations privatization to insiders,without external governance pressures,is hardly conducive for needed restructuring. 
C)  Outside ownership and control,preferably by blockholders,funds,foreigners,and/ or banks,are more likely to facilitate restructuring. 
D)  When outside investors such as institutional investors do come in,they fail to assert their power. 
A)  Privatization to insiders helps improve the performance of small firms. 
B)  In large corporations privatization to insiders,without external governance pressures,is hardly conducive for needed restructuring. 
C)  Outside ownership and control,preferably by blockholders,funds,foreigners,and/ or banks,are more likely to facilitate restructuring. 
D)  When outside investors such as institutional investors do come in,they fail to assert their power.

Question 9

​How does understanding corporate governance help in answering the four fundamental questions of strategy?

Accepted Answer

​First,why do firms differ? Firms differ

Question 10

Industry-based considerations regarding corporate governance include all of the following EXCEPT:

Accepted Answer

A)  Having more outside directors on the board is often regarded as having a negative impact on performance because of their lack of understanding as compared to insiders. 
B)  In industries characterized by rapid innovation requiring significant R&D investments (such as information technology),outside directors may have a negative impact on firm performance. 
C)  Research finds that for firms in low-growth,stable industries,no relationship exists between inside management ownership and firm performance. 
D)  In industries experiencing great turbulence,the presence of a single leader may allow a faster and more unified response to changing events. 
A)  Having more outside directors on the board is often regarded as having a negative impact on performance because of their lack of understanding as compared to insiders. 
B)  In industries characterized by rapid innovation requiring significant R&D investments (such as information technology),outside directors may have a negative impact on firm performance. 
C)  Research finds that for firms in low-growth,stable industries,no relationship exists between inside management ownership and firm performance. 
D)  In industries experiencing great turbulence,the presence of a single leader may allow a faster and more unified response to changing events.

Question 11

Convergence advocates argue that a "survival-of the-fittest" process will force firms globally to accept the best practices exemplified by Anglo-American practices.

Accepted Answer

A) True 
 B)False

Question 12

​Agency problems are eliminated by reducing information asymmetries.

Accepted Answer

A) True 
 B)False

Question 13

You are the founder of a firm that appears to have significant long-term growth potential.Right now you and your family own 100% of the firm's shares and you are trying to figure out whether to keep things that way.How might you do that? Should you do that?

Accepted Answer

In the United States,inheritance tax and

Question 14

Formal legal protection encourages founding families and their heirs to dilute their equity.

Accepted Answer

A) True 
 B)False

Question 15

​In recent years,the increased prevalence of shareholder capitalism is the result of:

Accepted Answer

A)  ​The global diffusion of best practices. 
B)  ​The impact of globalization. 
C)  ​The rise of capitalism. 
D)  ​All of the above. 
A)  ​The global diffusion of best practices. 
B)  ​The impact of globalization. 
C)  ​The rise of capitalism. 
D)  ​All of the above.

Question 16

​SOEs are an excellent way for firms to solve their incentive problems.

Accepted Answer

A) True 
 B)False

Question 17

​The likelihood of the same managers,managing the same assets,performing more effectively and reducing the level of principal-agent conflicts,is greater when:

Accepted Answer

A)  ​Informal rules are taken out of the mix. 
B)  ​Based on CEO duality. 
C)  ​Operating under the market for corporate control. 
D)  ​Private equity is involved. 
A)  ​Informal rules are taken out of the mix. 
B)  ​Based on CEO duality. 
C)  ​Operating under the market for corporate control. 
D)  ​Private equity is involved.

Question 18

As the opening case pointed out,on the positive side private,equity firms excel in all the following ways EXCEPT:

Accepted Answer

A)  They reduce income inequality between financiers and the rest of us. 
B)  They use a high level of debt that imposes strong financial discipline. 
C)  Private equity turns managers from agents to principals with substantial equity,thus providing a powerful incentive to them. 
D)  They pay managers more generously,but also punish failure more heavily. 
A)  They reduce income inequality between financiers and the rest of us. 
B)  They use a high level of debt that imposes strong financial discipline. 
C)  Private equity turns managers from agents to principals with substantial equity,thus providing a powerful incentive to them. 
D)  They pay managers more generously,but also punish failure more heavily.

Question 19

​The view that private ownership is superior to state ownership in economic policy making is known as the:

Accepted Answer

A)  ​Beijing Consensus. 
B)  ​Washington Consensus. 
C)  ​Moral hazard. 
D)  ​Stewardship theory. 
A)  ​Beijing Consensus. 
B)  ​Washington Consensus. 
C)  ​Moral hazard. 
D)  ​Stewardship theory.

Question 20

How directors strategically prioritize is about the same around the world.

Accepted Answer

A) True 
 B)False

In countries that have weak formal legal and regulatory institutions,concentrated ownership and control:

At this present time,what do you see happening in regard to privatization of SOEs?

From a corporate governance standpoint,a narrow scope may be indicative of managers' empire-building and risk reduction.

Strategists should:

"Capitalism without risk of failure becomes socialism" is the essence of the moral hazard of government bailouts.

The market for private equity involves going private by tapping into private equity.

What is the potential relationship between concern about a board dominated by insiders and concern about excess executive pay?

Three decades of privatization suggest all of the following EXCEPT:

How does understanding corporate governance help in answering the four fundamental questions of strategy?

Industry-based considerations regarding corporate governance include all of the following EXCEPT:

Convergence advocates argue that a "survival-of the-fittest" process will force firms globally to accept the best practices exemplified by Anglo-American practices.

Agency problems are eliminated by reducing information asymmetries.

You are the founder of a firm that appears to have significant long-term growth potential.Right now you and your family own 100% of the firm's shares and you are trying to figure out whether to keep things that way.How might you do that? Should you do that?

Formal legal protection encourages founding families and their heirs to dilute their equity.

In recent years,the increased prevalence of shareholder capitalism is the result of:

SOEs are an excellent way for firms to solve their incentive problems.

The likelihood of the same managers,managing the same assets,performing more effectively and reducing the level of principal-agent conflicts,is greater when:

As the opening case pointed out,on the positive side private,equity firms excel in all the following ways EXCEPT:

The view that private ownership is superior to state ownership in economic policy making is known as the:

How directors strategically prioritize is about the same around the world.

Strategizing Around the Globe

Managing Industry Competition

Leveraging Resources and Capabilities

Emphasizing Institutions, cultures, and Ethics

Growing and Internationalizingthe Entrepreneurial Firm

Entering Foreign Markets

Making Strategic Alliancee and Networks Work

Managing Global Competitive Dynamics

Diversifying, acquiring, and Restructuring

Strategizing, structuring, and Learningaround the World

Strategizing With Corporate Social Responsibility

Filters

Exam 11: Governing the Corporation Around the World

​In countries that have weak formal legal and regulatory institutions,concentrated ownership and control:

At this present time,what do you see happening in regard to privatization of SOEs?

​From a corporate governance standpoint,a narrow scope may be indicative of managers' empire-building and risk reduction.

Strategists should:

​"Capitalism without risk of failure becomes socialism" is the essence of the moral hazard of government bailouts.

The market for private equity involves going private by tapping into private equity.

What is the potential relationship between concern about a board dominated by insiders and concern about excess executive pay?

Three decades of privatization suggest all of the following EXCEPT:

​How does understanding corporate governance help in answering the four fundamental questions of strategy?

Industry-based considerations regarding corporate governance include all of the following EXCEPT:

Convergence advocates argue that a "survival-of the-fittest" process will force firms globally to accept the best practices exemplified by Anglo-American practices.

​Agency problems are eliminated by reducing information asymmetries.

You are the founder of a firm that appears to have significant long-term growth potential.Right now you and your family own 100% of the firm's shares and you are trying to figure out whether to keep things that way.How might you do that? Should you do that?

Formal legal protection encourages founding families and their heirs to dilute their equity.

​In recent years,the increased prevalence of shareholder capitalism is the result of:

​SOEs are an excellent way for firms to solve their incentive problems.

​The likelihood of the same managers,managing the same assets,performing more effectively and reducing the level of principal-agent conflicts,is greater when:

As the opening case pointed out,on the positive side private,equity firms excel in all the following ways EXCEPT:

​The view that private ownership is superior to state ownership in economic policy making is known as the:

How directors strategically prioritize is about the same around the world.

Strategizing Around the Globe

Managing Industry Competition

Leveraging Resources and Capabilities

Emphasizing Institutions, cultures, and Ethics

Growing and Internationalizingthe Entrepreneurial Firm

Entering Foreign Markets

Making Strategic Alliancee and Networks Work

Managing Global Competitive Dynamics

Diversifying, acquiring, and Restructuring

Strategizing, structuring, and Learningaround the World

Strategizing With Corporate Social Responsibility

Filters

In countries that have weak formal legal and regulatory institutions,concentrated ownership and control:

From a corporate governance standpoint,a narrow scope may be indicative of managers' empire-building and risk reduction.

"Capitalism without risk of failure becomes socialism" is the essence of the moral hazard of government bailouts.

How does understanding corporate governance help in answering the four fundamental questions of strategy?

Agency problems are eliminated by reducing information asymmetries.

In recent years,the increased prevalence of shareholder capitalism is the result of:

SOEs are an excellent way for firms to solve their incentive problems.

The likelihood of the same managers,managing the same assets,performing more effectively and reducing the level of principal-agent conflicts,is greater when:

The view that private ownership is superior to state ownership in economic policy making is known as the: