Strategic Management Theory And Cases An Integrated Approach 12th Edition By Hill – Test Bank

Overview

Chapter 11
Corporate Performance Governance and
Business Ethics

True/false

1. A union and the general public are examples of internal stakeholders.
(A) True
(B) False
Answer : (B)
2. In corporations, agency theory is used to explain the relationship between stockholders and
corporate managers, and between upper-level managers and the lower-level managers they
supervise.
(A) True
(B) False
Answer : (A)
3. An agency relationship continues throughout the hierarchy within a company.
(A) True
(B) False
Answer : (A)
4. There is a certain amount of performance ambiguity inherent in the relationship between a
principal and agent.
(A) True
(B) False
Answer : (A)
5. Phil is an employee at Global Tech Inc. He is considered an external stakeholder.
(A) True
(B) False
Answer : (B)
6. All stakeholders have an exchange relationship with the company.
(A) True
(B) False
Answer : (A)
7. Agency theory offers a way of understanding why managers do not always act in the best interests
of stakeholders.
(A) True
(B) False
Answer : (A)
8. While many agency relationships work well, problems arise when agents and principals have
different goals.
(A) True
(B) False
Answer : (A)

9. If a company fails to take stakeholder claims into account, stakeholders may withdraw their
support.
(A) True
(B) False
Answer : (A)
10. Strike price is the price at which the stock was trading when the option was originally granted.
(A) True
(B) False
Answer : (A)