Agency theory

Which of the following are characteristics of economic agents?a. They participate in economic events, but do not assume control of the resources.b. They participate in economic events, but not in support events.c. Internal agents are employees of the company whose system is being modeled.d. External agents are not employees of the company whose system is being modeled.e. All of the above describe agents.

Corporate governance is defined as "the set of laws, rules, and procedures that influence the company's operations and the decisions its managers make."  Agency costs are "the reductions in a company's value due to actions by agents (managers), including the costs principals (shareholders) incur (such as monitoring costs) trying to modify their agents' behaviors." Corporate governance provisions are set in place as way to help minimize the agency conflict within a firm. Not one provision alone completely eliminates the potential for all agency conflict. As a result, multiple governance provisions are typically in place at a firm to help minimize the risk.  The book lists 5 common internal governance provisions: monitoring and discipline (threat to fire) by the board of directors charter provisions and bylaws that affect the likelihood of hostile takeovers (remember that in general: shareholders like hostile takeovers, managers do not) compensation plans capital structure choices…

1. A company that wants to be proactive and decrease unethical temptation should have and enforce: A. Corporate culture B. An ethics statement C. Politics D. All of these E. None of these   2. ________ refers to different behavior patterns among various groups. A. Culture B. Education C. Race D. All of these E. None of these   3. Although people are different, we must: A. Use diversity as a means of resolving conflict B. Remind coworkers of these differences C. Treat everyone with respect and professionalism D. All of these

Corporate social responsibility goes beyond serving the stakeholders of a company. * TRUE FALSE

The tension between the interests of the CEO and the interests of long-term stakeholders helps to explain why: Group of answer choices A. Conflicts of interest can easily happen. D. Both A & B B. Boards of directors need to maintain their independence from executives. C. Absence of agency risk is apparent.

The likelihood that managers may place personal goals ahead of corporate goals is called an: a. agency problem b. stakeholder adversity c. strategic advantage d. opportunity cost

Agency theory suggests that one way to motivate managers to act in the best interests of the owners/shareholders is to link managerial compensation to firms' payoffs, such as net income or share returns. However, such a linkage imposes risk on the manager. Required: (1) Why is it important to control or reduce some of the risk thus imposed on managers? Explain. Discuss two methods by which risk imposed on the managers could be reduced.

Agency costs are an integral part of agency relationships. they are a key concern in the shareholder/management relationship in that   agency cost results in a reduction in the value of the company because of the administration costs in establishing agencies   2. shareholders view a company that operates as an agent to another company as being more risky,and therefore they are willing to pay less for shares in a company 3. agency costs result in a reduction in the value of the company because management pursues its own interest 4. establishment of agency relationships require extensive legal and contractual agreements, which can be very costly

Which of the following best describes the role of corporate governance in organizations? OA. Limiting access to customer bases ○ B. Reducing the volume of information ○ C. Decreasing profitability OD. Ensuring ethical conduct and accountability

Which statement best describes the essence of the Agency Problem?   Shareholders allocate decision-making authority to the managers, who might act dishonestly or guard their own self-interest.    Managers and shareholders always have aligned interests and goals.   Managers always act in the best interest of shareholders.   Shareholders retain all decision-making authority.

Why might a moral person who is not viewed as a moral manager fail to establish an ethical culture in an organization?

Which of the following statements about corporate social responsibility (CSR) is false? O a. CSR describes the efforts of companies to take responsibility for improving social well-being within and outside of the firm. b. Companies are taking a more active role in recent years in focusing and reporting on their own CSR initiatives. c. CSR describes the efforts of companies to take responsibility for the impact their operations have on society. d. CSR activities may include waste and pollution minimization but do not include agricultural initiatives within farming and ranching.

PAT assumes that managers behave in an efficient manner a. non b. False c. True d. depends on the loyalty and ethical issues

agency costs may occur if  A. Managers make decisions for their own best interest  B. Managers may not attempt to maximize the value of the firm to shareholders  C. The board does not properly oversee the activities and decisions of managers D.all of the above

Which of the following is NOT a correct statement about management? a. Management's application is limited to private organizations only. b. Management is applicable to all kinds of organizations. c. Management is concerned with all kinds of resources. d. Management's purpose is to formulate effective organizational strategies.

Business Ethics and Corporate Social Responsibility: Do businesses have a responsibility to society or to their shareholders?  Explain your answer.  Do these responsibilities conflict or work together? How do social and profit responsibility relate to CSR?

What is the goal of organizational​ behavior?A.To change personalities in organizations B.To understand and predict human behavior in organizationsC.To better understand the competition of your organizationD.To maximize organizational profitabilityE.To understand how organizations behave