A) It encourages managers to put their own interests above those of stockholders.
B) It usually occurs when the management has maximized the wealth of the stockholders.
C) It often gives senior managers more independence when it comes to granting stock options.
D) It has ceased to exist in companies since the late 1990s.
E) It is the governance mechanism of last resort invoked only when the others have failed.
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A) Glass-ceiling effect
B) Self-dealing
C) Agency strategy
D) Takeover constraints
E) Stock options
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Unethical behavior often occurs when peo...View Answer
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A) Creditors are examples of internal stakeholders.
B) Stakeholders do not engage in an exchange relationship with their company.
C) Stockholders are internal stakeholders that provide an enterprise with risk capital.
D) The goals of different stakeholder groups within a company are the same, and therefore do not lead to any conflicts.
E) It is mandatory for a company to satisfy the claims of all stakeholders.
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A) The information contained in the fmancial statements can enable a stockholder to calculate the ROIC of a company in which he or she invests.
B) Publicly traded companies in the United States are not required to file quarterly or annual reports with the SEC.
C) So far, there have been no cases in which the auditors were found complying with the companies to misrepresent fmancial information.
D) The SEC requires that the accounts be audited by a committee formed by the board members and senior employees of the company.
E) Sarbanes-Oxley Act in 2002 barred CEOs and CFOs from endorsing their company's fmancial statements.
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A) stockholders.
B) employees.
C) executive officers.
D) customers.
E) suppliers.
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A) information asymmetry
B) utilitarianism.
C) self-dealing.
D) greenmail.
E) corruption.
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A) Business ethics significantly differ from personal ethics.
B) An individual with a strong sense of personal ethics is more likely to engage in self-dealing.
C) A personal ethical code will exert a profound influence on the way individuals behave as businesspeople.
D) Focusing only on applying straightforward business calculus can completely eliminate ethical concerns.
E) An organizational culture that fosters decision making on purely economic terms eliminates unethical practices.
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A) Under accounting regulations that were enforced until2005, stock options, like wages and salaries, were expensed.
B) Huge stock-option grants can align the interests of management and stockholders.
C) Stock-based compensation schemes can dilute the equity of stockholders.
D) Huge stock-option grants increase the outstanding number of shares in a company.
E) Top managers can earn huge bonuses from stock options that were granted several years prior.
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A) Agency strategy
B) Dumping strategy
C) Price limiting
D) Anticompetitive behavior
E) On-the-job consumption
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A) Attaining future profit growth may require investments that reduce the current rate of profitability.
B) Managers must find the right balance between profitability and profit growth.
C) Too much emphasis on current profitability at the expense of profit growth can make an enterprise less attractive to shareholders.
D) Satisfying the claims of other key stakeholder groups happens at the risk of decreased profitability and profit growth.
E) Too much emphasis on profit growth can reduce profitability and make an enterprise less attractive to shareholders.
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A) CEOs also earn from the stock options that they grant to managers.
B) Empire building helps CEOs increase their earnings.
C) CEO compensation is closely tied to corporate performance in most fmns.
D) CEO pay is rising more rapidly than pay for other workers.
E) The level of CEO compensation is determined by the corporate board of directors.
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A) they discourage empire building.
B) they reduce motivation among agents.
C) they do not aligu management and stockholder interests
D) they dilute stockholders' equity.
E) they adversely affect the earnings of principals.
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A) Stock option
B) Greenmail
C) Self dealing
D) On-the-job consumption
E) Risk capital
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