Theory Of Strategic Management With Cases International Edition By Charles – 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.

ANS: F
PTS: 1 DIF: Easy
OBJ: 1 – Understand the relationship between stakeholder management and corporate performance
NAT: AACSB Analytic | Environmental Influence KEY: Knowledge

2. All stakeholders are in an exchange relationship with the company.

ANS: T
PTS: 1 DIF: Moderate
OBJ: 1 – Understand the relationship between stakeholder management and corporate performance
NAT: AACSB Analytic | Environmental Influence KEY: Knowledge

3. If a company fails to take stakeholder claims into account, stakeholders may withdraw their support.

ANS: T
PTS: 1 DIF: Moderate
OBJ: 1 – Understand the relationship between stakeholder management and corporate performance
NAT: AACSB Analytic | Environmental Influence KEY: Knowledge

4. Through stock ownership plans, stockholders receive employee benefits.

ANS: F
PTS: 1 DIF: Moderate
OBJ: 2 – Explain why maximizing returns to stockholders is often viewed as the preeminent goal in many corporations NAT: AACSB Analytic | HRM KEY: Knowledge

5. Stockholders receive a return on their investment in a company’s stock from dividend payments and capital appreciation.

ANS: T
PTS: 1 DIF: Moderate
OBJ: 2 – Explain why maximizing returns to stockholders is often viewed as the preeminent goal in many corporations NAT: AACSB Analytic | Environmental Influence
KEY: Knowledge

6. Attaining future profit growth may require investments that reduce the current rate of profitability.

ANS: T
PTS: 1 DIF: Moderate
OBJ: 2 – Explain why maximizing returns to stockholders is often viewed as the preeminent goal in many corporations NAT: AACSB Analytic | Creation of Value
KEY: Comprehension

7. Maximizing long-run profitability and profit growth is the best way to satisfy the claims of several key stakeholder groups irrespective to how the company does so.

ANS: F
PTS: 1 DIF: Easy
OBJ: 2 – Explain why maximizing returns to stockholders is often viewed as the preeminent goal in many corporations NAT: AACSB Ethics | Legal Responsibilities
KEY: Comprehension

8. Agency theory offers a way of understanding why managers do not always act in the best interests of stakeholders.

ANS: T
PTS: 1 DIF: Moderate
OBJ: 1 – Understand the relationship between stakeholder management and corporate performance
NAT: AACSB Ethics | Legal Responsibilities

9. 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.

ANS: T
PTS: 1 DIF: Moderate
OBJ: 1 – Understand the relationship between stakeholder management and corporate performance
NAT: AACSB Ethics | Legal Responsibilities KEY: Knowledge

10. While many agency relationships work well, problems arise when agents and principals have different goals.

ANS: T
PTS: 1 DIF: Easy
OBJ: 1 – Understand the relationship between stakeholder management and corporate performance
NAT: AACSB Ethics | Legal Responsibilities KEY: Knowledge