D. research and development (R&D) and marketing . E. accounting and industrial engineering. Q.121) The basic principles of agency theory are A. relatively straightforward . B. somewhat obtuse. C. of limited use in explaining the relationship between senior managers and stakeholders. D. slanted in favor of managers as opposed to stakeholders. E. mostly theoretical in nature. Q.122) A typical board of directors is composed of A. inside directors. B. external directors. C. inside directors and consumer advocates. D. outside directors and union representatives. E. inside and outside directors. Q.123) The quest to maximize a company's profitability should be constrained by A. law. B. managers. C. ethical obligations. D. CEOs. E. all of the above . Q.124) The purpose of governance mechanisms in corporations is to
A. keep employees in line. B. reduce the scope and frequency of the agency problem . C. satisfy the requirements of the Securities and Exchange Commission (SEC). D. limit corporate growth to manageable rates. E. none of the above. Q.125) 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. Q.126) Which of the following is not a reason why the board of directors may act as the guardian of stockholder interests within a company? A. Board members are directly elected by stockholders. B. The board is positioned at the apex of decision making within a company and is thus in a good position to monitor strategies. C. Board members can be held legally accountable for the actions of the company. D. Many board members are the nominees of the company CEO . E. The board has legal authority to hire, fire, and compensate senior executives. Q.127) A company's stakeholders include which of the following? A. Stockholders B. Creditors C. Employees D. Customers E. All of the above Q.128) Why are managers thought to engage in empire building? A. Growth results in large company size, and large size satisfies managers' needs for power, status, income, and job security. B. The pursuit of growth represents the best way of maximizing the long-run profitability of the company. C. Growth is designed to increase market share, which in turn increases company profits. D. Companies that do not grow stagnate. E. Stockholders would rather invest in large companies than in small ones. Q.129) The abbreviation IPO stands for A. initial product output. B. interim production output. C. initial public offering. D. inventory purchasing online. E. none of the above. Q.130) Over the past decade, maximizing returns to shareholders has A. become less important. B. taken on added importance .
C. remained the same as in the past. D. been a minor corporate goal. E. none of the above. Q.131) When are the interests of stockholders and senior managers likely to be most closely aligned?
- Fall '13