QUIZ TOPIC 2 PART 1

Below is the correct regarding Corporate Governance (CG) EXCEPT?

• Process and structure used to manage and direct business affair

• CG can enhance corporate accountability

• CG are focus on internal and external control

• CG can contribute in minimizing the value of the firm

The following parties are main concern in the CG model EXCEPT?

• Government

• Shareholders

• Board of directors

• Management

Agency theory is the contract bonding between principal and agent. Who is the principal?

• Managers

• CEO

• Stockholder

• Auditor

What is the agency problem that can arise from agency theory?

• Management dominant

• Conflict of interest

• Balance the interest of all stakeholders

• Concern on the sustainability of the company

When one party in a transaction is in possession of MORE information than the other?

• Moral hazard

• Information asymmetry

• Utility maximizers

• Risk aversion