Exam 11: Corporate Performance, Governance, and Business Ethics

Arnold is a CEO at Gamma LLC.He has control over the corporate funds of the company.Arnold has often taken funds from the company to pay for his travel and hotel expenses.The funds could otherwise have increased stockholder returns.Which of the following concepts is illustrated in this scenario?

The purpose of governance mechanisms in corporations is to:

are external stakeholders in a company.

Which of the following statements is true about the board of directors?

Which of the following statements is true in the context of stock-based compensation?

To foster ethical behavior through organizational culture, businesses should:

Inside directors are not full-time employees of the company.

is a situation where an agent has more knowledge about resources he or she is managing than the principal has.

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:

The internal research department of Libra Inc.has found that the packaging of health supplements produced by the company is faulty, and is resulting in poor quality.Despite this knowledge, the company has not improved the packaging and instead has advertised to its customers that their packaging is foolproof.Which of the following concepts is illustrated in this scenario?

Agency theory offers a way of understanding why managers do not always act in the best interests of stakeholders.

A stock option is a right to buy:

Financial statements can be a tool of effective governance only if they provide consistent, detailed, and accurate information.

In corporations, 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.

Which of the following statements is true about strategic control systems?

In order to reduce its production costs, Delta LLC.has moved its manufacturing units to an underdeveloped country where there are few labor laws.The employees at the manufacturing units are children and teenagers, and they receive minimal wages.Which of the following ethical issues is illustrated in this scenario?

An agency relationship continues down a hierarchy within a company.

Identify and discuss the governance mechanisms that help align the incentives of stockholders and managers, and help monitor and control management.

Which of the following statements is true in the context of principal-agent relationships?

Which of the following is NOT a responsibility of the board of directors?