GB Finalterm part 3

1. The relationship between shareholders and professional managers is a relationship between principals and principals.

• a. True

• b. False

2. Outside directors are top executives of the firm.

• a. True

• b. False

3. Overall, governance practices need to fit with the nature of the industry in which firms are competing. This cautions against prescribing universal “best” practices.

• a. True

• b. False

4. FPI investors demand less protection.

• a. True

• b. False

5. A stakeholder is “any group or individual who can affect or is affected by the achievement of the organization’s objectives.”

• a. True

• b. False

6. A key goal for CSR is global sustainability, which is defined as the ability “to meet the needs of the present without compromising the ability of future generations to meet their needs.”

• a. True

• b. False

7. Suppliers and customers are typically considered secondary stakeholder group.

• a. True

• b. False

8. Agency theory assumes that managers:

• a. Have a responsibility to the owners.

• b. Are agents who are opportunistic and engage in self-serving activities.

• c. A and B above.

• d. Can be left to their own devices.

• e. Are effective steward of the owners’ interests.

9. Boards of directors perform all of the following except:

• a. Control.

• b. Service.

• c. Resource acquisition functions.

• d. A through C above.

• e. Day to day operations.

10. CSR tends to be the least concerned with improving

• a. Global sustainability.

• b.  Shareholder wealth maximization.

• c. Rising levels of population.

• d. Inequity.

• e. High levels of poverty in some countries.