B ceo c top management team d ceo and the top

b. CEO.
c. top management team.
d. CEO and the top management team.
e. stockholders.
ANS: E PTS: 1 DIF: Easy
OBJ: 2 - Explain why maximizing returns to stockholders is often viewed as the preeminent goal in
many corporations NAT: AACSB Ethics | Ethical Responsibilities
KEY: Knowledge
38. Agency theory would not be useful in understanding the relationship between
a. a CEO and his or her top management team.
b. top-level executives and middle managers.
c. managers at the same organizational level.
d. stockholders and the CEO.
e. lower-level managers and the workers they supervise.
ANS: C PTS: 1 DIF: Moderate
OBJ: 2 - Explain why maximizing returns to stockholders is often viewed as the preeminent goal in
many corporations NAT: AACSB Ethics | Ethical Responsibilities
KEY: Comprehension
39. When are the interests of stockholders and senior managers likely to be most closely aligned?
a. When the board of directors is dominated by insiders
b. When managers receive most of their compensation in the form of a regular salary
c. When stockholders are weak
d. When managers receive most of their compensation in the form of stock options
e. When corporate raiders are unable to mount a takeover bid
ANS: D PTS: 1 DIF: Moderate
OBJ: 3 - Describe the various governance mechanisms that are used to align the interest of
stockholders and managers NAT: AACSB Ethics | HRM
KEY: Comprehension
40. Which of the following is not a governance mechanism used to align the interests of managers and
stockholders?
a. Stockholder meetings

b. The board of directors
c. Stock-based compensation schemes
d. The mission statement
e. Takeover constraints
ANS: A PTS: 1 DIF: Moderate
OBJ: 3 - Describe the various governance mechanisms that are used to align the interest of
stockholders and managers NAT: AACSB Ethics | Ethical Responsibilities
KEY: Comprehension
41. Which of the following is not a responsibility of the board of directors?
a. Monitor corporate strategy decisions and ensure that they are consistent with stockholder
interests
b. Apply sanctions on management when appropriate
c. Hire, fire, and compensate the CEO
d. Develop the company's competitive strategy
e. Make sure the audited financial statements present a true picture of the company's
financial situation
ANS: D PTS: 1 DIF: Moderate
OBJ: 3 - Describe the various governance mechanisms that are used to align the interest of
stockholders and managers NAT: AACSB Ethics | Ethical Responsibilities
KEY: Comprehension
42. A company's stockholders provide a company with
a. emotional and intellectual support.
b. risk capital.
c. free advertising.
d. advice on new product lines.
e. a code of ethics.
ANS: B PTS: 1 DIF: Easy
OBJ: 2 - Explain why maximizing returns to stockholders is often viewed as the preeminent goal in
many corporations NAT: AACSB Analytic | Creation of Value
KEY: Knowledge
43. Members of the board of directors are supposed to be agents for
a. stockholders.