Foreign stock markets are frequently characterized by controlling shareholders for the individual publicly traded firms. Which of the following is NOT identified by the authors as typical controlling shareholders?
A) the government (for example, privatize
D) All of the above were identified by the authors as controlling shareholders.
Which of the following is NOT typically associated with the public ownership of business organizations?
A) the state
B) the government
C) families
D) civil society
C) families
Which of the following is NOT typically associated with the private ownership of business organizations?
A) the government
B) families
C) individuals
D) publicly traded, widely-held organizations
A) the government
State Owned Enterprises (SOEs):
A) are a form of public ownership.
B) are created for commercial activities rather than civil or social activities.
C) are the dominant form of business organization in some countries.
D) are all of the above.
D) are all of the above.
The problems that may arise due to the separation of ownership and management in large business organizations is know as:
A) separation anxiety.
B) the agency problem.
C) corporate disconnect theory.
D) none of the above
B) the agency problem.
Privatization is a term used to describe:
A) firms that are purchased by the government.
B) government operations that are purchased by corporations and other investors.
C) firms that do not use publicly available debt.
D) non-public meetings held by memb
B) government operations that are purchased by corporations and other investors.
TRUE OR FALSE: In the U.S. and U.K. stock markets are characterized by ownership of firms concentrated in the hands of a few controlling shareholders. In contrast, the rest of the world tends to have more widespread ownership of shares.
FALSE
TRUE OR FALSE: State Owned Enterprises (SOEs) by their very name cannot be traded on stock exchanges because they are government owned.
FALSE
TRUE OR FALSE: According to recent research, family-owned firms in some highly-developed economies typically outperform publicly-owned firms.
TRUE
TRUE OR FALSE: According to recent research, family-owned firms in some highly-developed economies typically outperform publicly-owned firms.
TRUE
TRUE OR FALSE: According to the authors, dual classes of voting stock are the norm in non-Anglo-American markets.
TRUE
Maximize corporate wealth":
A) is the primary objective of the non-Anglo-American model of management.
B) as a management objective treats shareholders on a par with other corporate stakeholders such as creditors, labor, and local community.
C) has a bro
D) all of the above
The Shareholder Wealth Maximization Model (SWM):
A) combines the interests and inputs of shareholders, creditors, management, employees, and society.
B) is being usurped by the Stakeholder Capitalism Model as those types of MNEs dominate their global indu
C) clearly places shareholders as the primary stakeholder.
The Stakeholder Capitalism Model (SCM):
A) clearly places shareholders as the primary stakeholder.
B) combines the interests and inputs of shareholders, creditors, management, employees, and society.
C) has financial profit as its goal and is often termed
B) combines the interests and inputs of shareholders, creditors, management, employees, and society.
In the Anglo-American model of corporate governance, the primary goal of management is to:
A) maximize the wealth of all stakeholders.
B) maximize shareholder wealth.
C) minimize costs.
D) minimize risk.
B) maximize shareholder wealth.
In finance, an efficient market is one in which:
A) prices are assumed to be correct.
B) prices adjust quickly and accurately to new information.
C) prices are the best allocators of capital in the macro economy.
D) all of the above
D) all of the above
Systematic risk can be defined as:
A) the total risk to the firm.
B) the risk of the individual security.
C) the risk of the market in general.
D) the risk that can be systematically diversified away.
C) the risk of the market in general.
Unsystematic risk can be defined as:
A) the total risk to the firm.
B) the risk of the individual security.
C) the added risk that a firm's shares bring to a diversified portfolio.
D) the risk of the market in general.
B) the risk of the individual security.
The study of how shareholders can motivate management to accept the prescriptions of the shareholder wealth maximization model is called:
A) market efficiency.
B) the SWM model.
C) agency theory.
D) the SCM model.
C) agency theory.
Under the Shareholder Wealth Maximization Model (SWM) of corporate governance, poor firm performance is likely to be faced with all but which of the following?
A) sale of shares by disgruntled current shareholders
B) shareholder activism to attempt a chan
D) prison time for executive management
Which of the following is a reason why managers act to maximize shareholder wealth in Anglo-American markets?
A) the use of stock options to align the goals of shareholders and managers
B) the market for corporate control that allows for outside takeover
D) all of the above
Which of the following is NOT true regarding the stakeholder capitalism model?
A) Banks and other financial institutions are less important creditors than securities markets.
B) Labor unions are more powerful than in the Anglo-American markets.
C) Governm
A) Banks and other financial institutions are less important creditors than securities markets.
The stakeholder capitalism model:
A) typically avoids the flaw of impatient capital.
B) tries to meet the desires of multiple stakeholders.
C) may leave management without a clear signal about tradeoffs among the several stakeholders.
D) all of the above
D) all of the above
Which of the following operational goals for the international firm may be incompatible with the others?
A) maintaining a strong local currency
B) maximization of after-tax income
C) minimization of the firm's effective global tax burden
D) Each of these
D) Each of these goals may be incompatible with one or more of the others.
Which of the following is generally NOT considered to be a viable operational goal for a firm?
A) maintaining a strong local currency
B) maximization of after-tax income
C) minimization of the firm's effective global tax burden
D) correct positioning of t
A) maintaining a strong local currency
The primary operational goal for the firm is to:
A) maximize after-tax profits in each country where the firm is operating.
B) minimize the total financial risk to the firm.
C) maximize the consolidated after-tax profits of the firm.
D) maximize the total
C) maximize the consolidated after-tax profits of the firm.
With shareholder wealth maximization as the manager's goal, capital may be termed:
A) impatient.
B) patient.
C) borrowed.
D) bought.
A) impatient.
If share price rises from $12 to $15 per share, and pays a dividend of $1 per share, what was the rate of return to shareholders?
A) 26.67%
B) -13.33%
C) 33.33%
D) 16.67%
C) 33.33%
PolyProduction Inc. has two classes of common stock. Class A has 5 million shares with 10 votes per share. Class B has 5 million shares with 1 vote per share. If the dividends per share are equal for both class A and B stock, then Class A shareholders hav
B) 90.91%; 50.00%
TRUE OR FALSE: In recent years the trend has been for markets to increasing focus on the shareholder wealth form of wealth maximization.
TRUE
TRUE OR FALSE: Non-Anglo-American markets are dominated by the "one-vote-one-share" rule.
FALSE
TRUE OR FALSE: The stakeholder capitalism model (SCM) holds that total risk (operational and financial) is more important than just systematic risk.
FALSE
TRUE OR FALSE: In recent years the trend has been for markets to increasing focus on the global stakeholders.
FALSE
TRUE OR FALSE: Patient Capitalism is characterized by short-term focus by both management and investors.
FALSE
TRUE OR FALSE: Agency theory states that unsystematic risk can be eliminated through diversification.
FALSE
TRUE OR FALSE: The stakeholder capitalism model does not assume that equity markets are either efficient or inefficient.
TRUE
TRUE OR FALSE: The stakeholder capitalism model assumes that only systematic risk "counts" or is a prime concern for management.
FALSE
TRUE OR FALSE: Dividend yield is the change in the share price of stock as traded in the public equity markets.
FALSE
TRUE OR FALSE: The goal of all international corporations is to maximize shareholder wealth.
FALSE
TRUE OR FALSE: Systematic risk can be eliminated through portfolio diversification.
FALSE
TRUE OR FALSE: A recent study shows that privately held firms use less financial leverage and enjoy lower costs of debt than publicly traded firms.
TRUE
TRUE OR FALSE: In the stakeholder capitalism model (SCM) the assumption of market efficiency is absolutely critical.
FALSE
The number of publicly traded firms:
A) peaked in the U.S. in 1996.
B) peaked worldwide in 1996.
C) increased significantly in 2009 as a result of the international financial crisis.
D) all of the above
A) peaked in the U.S. in 1996.
Which of the following is NOT a source of new stock exchange listing additions?
A) initial public offerings
B) movements of share listings from one exchange to another
C) spinouts from larger firms
D) all of the above are sources
D) all of the above are sources
Which of the following is NOT a delisting category?
A) forced delistings
B) mergers
C) acquisitions
D) all of the above are categories of delistings
D) all of the above are categories of delistings
TRUE OR FALSE: U.S. listings of publicly traded firms as a percentage of worldwide listings of such firms INCREASED from 11% in 1996 to approximately 33% in 2010.
FALSE
TRUE OR FALSE: Companies that are delisted cease to trade.
FALSE
TRUE OR FALSE: Since movements between exchanges typically are a zero sum within a country, and spinouts and bulletin board movements are few in number, real growth in listings comes from IPOs.
FALSE
Which of the following broad topics is NOT identified as an area to be established as good corporate governance practice by the Organization for Economic Cooperation and Development (OECD)?
A) protect the rights of shareholders
B) disclosure and transpare
D) All of the above should be a concern of good corporate governance.
The relationship among stakeholders used to determine and control the strategic direction and performance of an organization is termed:
A) corporate governance.
B) Anglo-American activism.
C) capital structure.
D) working capital management.
A) corporate governance.
When discussing the structure of corporate governance, the authors distinguish between internal and external factors. ________ is an example of an internal factor, and ________ is an example of an external factor.
A) Equity markets; executive management
B
C) Executive management; auditors
Which of the following is NOT commonly associated with a government affiliated form of corporate governance regime?
A) no minority influence
B) lack of transparency
C) state ownership of enterprise
D) All are associated with this type of corporate governa
D) All are associated with this type of corporate governance regime.
Generally speaking, which of the following is NOT considered an important factor in the composition and control of corporate boards of directors?
A) the number of insider vs outside directors
B) the total number of directors on the board
C) the compositio
D) All of the above are important factors of board composition.
Signed into law on July 30, 2002, the ________ Act requires CEOs of publicly traded companies to vouch for the veracity of the firm's published financial statements.
A) Smoot-Hawley
B) Humphrey-Hawkins
C) McCain-Merrill
D) Sarbanes-Oxley
D) Sarbanes-Oxley
The Sarbanes-Oxley Act, passed by the U.S. Congress in July 2002, was designed to:
A) reinstitute heavy tariffs on international trade.
B) reform corporate governance.
C) limit the Federal Reserve Board's ability to engage in the buying and selling of gol
B) reform corporate governance.
Anglo-American markets is a term used to describe business markets in:
A) North, Central, and South America.
B) the United States, Canada, and Western Europe.
C) the United States, United Kingdom, Canada, Australia and New Zealand.
D) the United States, F
C) the United States, United Kingdom, Canada, Australia and New Zealand.
The deliberation of the of the process demonstrated in the European-Japanese system of corporate governance has sometimes been termed:
A) socialism.
B) impatient capital.
C) patient capital.
D) communism.
C) patient capital.
Which of the following is NOT an important concept when distinguishing between international and domestic financial management?
A) corporate governance
B) culture, history, and institutions
C) political risk
D) All of the above are important distinguishin
D) All of the above are important distinguishing concepts.
The Board of Directors:
A) consists exclusively of the officers of the corporation.
B) is the legal body which is accountable for the governance of the corporation.
C) are not subject to the external forces of the marketplace.
D) is appointed by the Secur
B) is the legal body which is accountable for the governance of the corporation.
Which of the following is NOT a possible and appropriate response by shareholders dissatisfied with existing firm management of a publicly traded firm?
A) Shareholders could sell their shares of stock.
B) Shareholders could remain quietly disgruntled.
C)
D) All of these responses may be possible and appropriate.
TRUE OR FALSE: Regarding comparative corporate governance regimes: Bank-based regimes characterized by government influence in bank lending and a lack of transparency is often found in countries such as Korea and Germany.
TRUE
TRUE OR FALSE: Investor protection is typically better in countries with codified civil law (the Code Napoleon) than in countries with a legal system based in English common law.
FALSE
TRUE OR FALSE: The relatively low cost of compliance with the Sarbanes-Oxley Act (SOX) has been a surprising benefit of the act.
FALSE
TRUE OR FALSE: Having Anglo-Americans as members of the board of directors of a non-Anglo-American firm signals poor corporate governance in the firm.
FALSE