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Exam 9: Strategic Control and Corporate Governance

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Question 31

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Agency theory is concerned with resolving two problems that can occur in agency relationships. Which of the following is not one of those problems?

A) Goals conflict between principals and agents.
B) Verification of actual agency activity is expensive and difficult to obtain.
C) Principals and agents have differing attitudes toward risk.
D) Stockholders and management align with external stakeholders.

E) A) and D)
F) C) and D)

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Question 32

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Once a strong and healthy organizational culture has been established, it becomes self-sustaining.

A) True
B) False

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Question 33

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CalPERS, the California Public Employees Retirement System, manages over 240 billion dollars in assets. As an example of shared activism, they review all short- and long-term performance figures for each of the firms in which they invest and request changes in the governance structure of those firms, when they feel the firm is not responsive to their concerns.

The traditional approach to strategic control is sequential. Which of the following is not one of the steps in the sequence?

The risk of being acquired by hostile raiders is often referred to as the takeover constraint.

As firms simultaneously downsize and face the need for increased coordination across organizational boundaries, a control system based primarily on ______________ is dysfunctional.

Culture, a system of unwritten rules that forms and internalized influence over behavior, is often found in professional organizations.

Regulations backed up with strong sanctions do not help an organization avoid conducting business in an unethical manner.

In order to minimize the temptation for managers to act in their own self-interest, governance mechanisms exist for implementation consideration. Which of the following is not a primary means for monitoring managerial behavior?

Rule-based controls are least appropriate in organizations with which one of the following characteristics?

Rule-based controls are appropriate in organizations, where most of the employees are unskilled.

Research has shown that executives who have large holdings of stock in their firm are more likely to have diversification strategies more consistent with shareholder interests, like increasing long-term returns.

When firms like Siebel Systems, Disney, Oracle, and Microsoft separated the roles of CEO and chairman of the board, they were creating CEO duality.

The primary participants in corporate governance, according to Monks and Minow, are the shareholders, board of directors, and employees.

Which of the following is not a characteristic of effective reward and incentive systems?

Which of the following is the primary drawback of traditional strategic control systems?

In the contemporary approach to strategic control, adapting to and anticipating both internal and external environmental change is an integral part. The relationships between _________, __________, and __________ are highly interactive.

Action plans permit a degree of autonomy for managers who sometimes must modify activities to achieve the desired outcome.

Most successful organizations minimize the need for explicit rules, regulations, and other boundaries by

Informational control systems are concerned with which of the following?