Question :
11.Strategists should:
a.Understand the nature of principal–agent and principal–principal conflicts to : 1332130
11.Strategists should:
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.Use an understanding of corporate governance to help answer the four fundamental questions in strategy.
e.All of the above.
12.As the closing case points out, the positive side private equity firms excel in all the following ways except:
a.They always send experts to sit on the board and are hands-on in managing.
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.
e.They reduce income inequality between financiers and the rest of us.
13.As the closing case points out on the negative side, private equity firms have been accused of all of the following except:
a.Being “barbarians.”
b.Being “asset strippers,” and “locusts.”
c.Internationally, causing shock in countries suddenly facing the full rigor of Anglo-American private equity.
d.Placing CSR ahead of all rational economic decisions.
e.None of the above.
14.The defense of private equity includes all of the following points except:
a.While private equity results in job cuts, the same might happen if targets were acquired by public firms.
b.It would not be rational for private buyers to destroy their prize therefore they attempt to avoid doing that.
c.Their record as corporate citizens is no more barbaric than that of public firms.
d.They point to a Texas utility in which owners paid shareholders a 25% premium, gave retail customers a 10% price cut, and dropped plans to build eight dirty coal-fired power plants—hailed by environmentalists as a major victory.
e.The actions of U.S. private equity firms have enhanced the image of the U.S. and capitalism around the world.
15.Diffused ownership is the opposite of concentrated ownership, and is more common in:
a.The US and UK.
b.South America.
c.Asia.
d.Africa.
e.The Pacific.
16.Most large, publicly traded UK corporations are now characterized by all of the following except:
a.Diffused ownership.
b.Numerous small shareholders.
c.A separation of ownership and control.
d.Control is largely concentrated in the hands of salaried, professional managers.
e.Corporate managers who own a majority of the stock.
17.Which of the following is not true regarding large institutional investors?
a.They include professionally managed mutual funds and pension pools.
b.They now own over 50 percent of the stock in major corporations.
c.They are the controlling stockholders in China.
d.Their ability to dump the stock is limited because selling out depresses the share price and harms the institutions.
e.They are more likely to exercise shareholder rights than smaller investors.
18.In regards to family ownership, all of the following are true except:
a.Most small firms in the world are owned and controlled by families.
b.The vast majority of large corporations throughout continental Europe, Asia, Latin America, and Africa no longer feature concentrated family ownership and control.
c.Family ownership and control may provide better incentives for the firm to focus on long-run performance.
d.Such ownership may also minimize the conflict between owners and professional managers typically encountered in widely owned firms.
e.Family ownership and control may lead to the selection of less qualified managers who happen to be the sons, daughters, and relatives of owners.
19.Which of the following is true in regards to outside directors?
a.The trend around the world is to introduce less outside directors.
b.In the United States, less than a half century ago, most boards were made up entirely or largely of outside directors.
c.Many US firms are now favoring a board that is entirely made of people who are insiders due the need for people who can understand the increasing complexity of MNEs.
d.Japanese boards have not waited until they are in financial difficulty to bring in outside directors from banks.
e.Academic research has failed to empirically establish a link between the outsider/insider ratio and firm performance.
20.Which of the following is true regarding CEO duality?
a.From an agency theory standpoint, if the board is to supervise agents such as the CEO, it seems imperative that the board be chaired by the same individual.
b.In US firms with CEO duality, the trend now is to appoint a lead independent director, who chairs the sessions held by outside directors that do not involve company executives.
c.A corporation led by two top leaders—a board chairman and a CEO – will at least have unity of command and experience less top-level conflict.
d.East Asia and Latin America where most firms have concentrated family ownership and control, there is less CEO duality.
e.Firms around the world are being pressured to combine the two top jobs.
