31.
Sam is a manager at StyleOne Apparels Inc. and is friends with the company’s CEO. This
privilege gives Sam the information that StyleOne Apparels is in the midst of talks to take
over a leading rival. Sam buys stocks of StyleOne with the expectation that its stocks will
appreciate. But the deal falls through and the stocks of StyleOne depreciate in the
following months. Are Sam’s actions unethical? Why?
32.
The risk of employee opportunism on behalf of agents in a public stock company is
exacerbated by
33.
In publicly traded companies, individuals who are delegated to perform duties on behalf of
company owners are known as
34.
An individual who is part owner of a company and hires another individual to act on his or
her behalf is referred to as a(n)
35.
Which of the following is
not
true of corporate governance in public stock companies?
36.
Which of the following real-world scenarios best exemplifies information asymmetry in a
public stock company?
37.
Which of the following acts in the Goldman Sachs-Galleon Group insider trading scandal is
an egregious exploitation of information asymmetry?
38.
Travis, the CEO of Riplon Corp., used company funds to buy a car worth $1 million and a
house for $6 million in Santa Fe. This is an example of
39.
According to the agency theory,
40.
In a public stock company, senior executives, such as the CEO, face agency problems
when
41.
The root cause of the principal-agent problem between senior executives and lower-level
employees can be explained by the
42.
Neville and Andre are customer care employees at JPN Care. In between calls, Neville and
Andre spend time on Facebook and YouTube. The relaxed guidelines at JPN allow them to
do that. However, sometimes, they knowingly avoid answering calls or keep customers on
hold, while they check their social networking accounts. Such behavior
43.
Raj is a recent graduate who states that he has interned at a major accounting firm so that
his value as a candidate for employment increases. A start-up recruits Raj based on his
stated credentials without verifying them. Two days into the job, Raj’s team lead realizes
that Raj does not know much of what he claimed to know during the interview. This
scenario best exemplifies
44.
At Opnic Corp., a cross-functional team is formed to work on a project for a new client.
The team consists of Darius and four other members. At most of the team’s presentations
to senior management, Darius takes the lead and discusses project specifics with the
management, while others chip in with additional information. At the completion of the
project, Darius is recommended for promotion, while the other team members receive little
recognition for their hard work. The reality is that Darius did very little actual work but
spent some time compiling the project report based on different documents submitted by
the others. This scenario at Opnic Corp. is a typical consequence of
45.
Adverse selection in a public stock company occurs when
46.
_____ is illustrated by a situation in which the principal cannot determine the value created
by individual members of a team.
47.
In principal-agent relationships, _____ describes the difficulty of principals to ascertain
whether agents have really put forth their best efforts.
48.
Rajat Gupta’s role in providing inside information to Galleon Group for the benefit of
Galleon Group’s stockholders and himself is an example of
49.
Who appoints the board of directors in a public stock company?
50.
Which of the following is true of the board of directors in a public stock company?
51.
Why do shareholders of public companies need to appoint a board of directors to
represent their interests?
52.
The day-to-day operations of a publicly traded company are conducted by
53.
The _____ is the centerpiece of corporate governance and is composed of inside and
outside members.
54.
The board of directors of a public stock company consists of
55.
Which of the following is
not
true about the members of the board of directors in a public
stock company?
56.
_____ are the board members who are part of a company’s senior management team
appointed by shareholders to provide the board with necessary information pertaining to
the company’s internal workings and performance.
57.
_____ are board members who are not employees of the firm, but frequently are senior
executives from other firms or full-time professionals.
58.
Fakhir is a board member at Garfield Motors Inc. He is also a senior executive of the firm.
The board is chaired by Ernest Jones, the CEO of Blixt Electronics. According to this
scenario, Fakhir
59.
Serena is the CEO of Pedalo Inc., a publicly traded company. The shareholders want
Serena on the board of directors despite her recent appointment as the CEO. This decision
of the shareholders is most likely because Serena
60.
Frank is a board member at Lofloy Greens Inc., a publicly traded company. In addition to
his duties on the board, Frank is also a full-time employee as a senior manager at Spinson
Locomotives Inc. Which of the following is most likely to be true of Frank?