hareholders have legally limited liability with respect to the contracts the company enters into. Explain why such institutional arrangements may lead to an excessive risk appetite of firms depending on the debt ratio
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Shareholders have legally limited liability with respect to the contracts the company enters into. Explain why such institutional arrangements may lead to an excessive risk appetite of firms depending on the debt ratio.
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- Describe the principal-agent problem between firm owners and managers.Which of the following statements regarding business ethics is NOT correct? According to Bagley in The Ethical Leader's Decision Tree, directors' obligation is to manage the corporation "for the best interests of the corporation", which might not be “maximizing shareholder value" all the time. According to Bagley in The Ethical Leader's Decision Tree, when there is no established ethics policy, directors can turn to their company values statement for guidance about what constitutes ethical business behavior. According to Epley and Kumar in How to Design an Ethical Organization, a better way to manage ethics is to design workplace context that encourage good behavior. Keeping prosocial values top of mind for employees as they make decisions will reduce the likelihood of transgressions. According to Epley and Kumar in How to Design an Ethical Organization, the "tone at the top" is a much more significant driver of employees' behavior than "tone in the middle".An alliance where two firms create and co-own a separate entity is called Group of answer choices a joint venture an equity alliance a nonequity alliance
- Explain the reasons why non-investment management arrangements (franchising, management contracts) are becoming increasingly popular in multinational hotel operation.Did the legal doctrine of limited liability apply to protect the shareholders of Union Carbide Corporation (U.S.)?One of the approaches for the Southern Company to comply with the Clean Air Act is to adopt fuel-switching technology. Do you think this strategic flexibility would have value to Southern Companys shareholders? Why?
- As part of their Corporate Governance role, Boards of Directors are responsible for the performance of the organization as well as conformance to various rules and regulations as required by governmental agencies. Some analysts believe that Boards should focus 70% of their time on Conformance and 30% on performance. Others believe that Boards should focus 70% of their time on performance and 30% on conformance. Explain which of the two approaches you believe to be more beneficial, giving your reasons why?Simmons, Hoffman, and Murray were partners doing business under the firm name of Simmons & Co. The firm borrowed money from a bank and gave the bank the bank the firm’s note for the loan. In addition, each partner guaranteed the note individually. The firm became insolvent, and a receiver was appointed. The bank claims that it has a right to file its claim as a firm debt and that it has a right to participate in the distribution of the assets of the individual partners before partnership creditors receive any payment from such assets. a. Explain the principle involved in this case. b. Is the bank correct? Why or why not?Maniam is a newly appointed compliance officer of a public listed company. He hassought your advice on the following compliance issues:(a) Explain how should the minority shareholders be treated? (b) Boardroom independence.
- Refer to Case 9: Enron: Questionable Accounting Leads to Collapse The misconduct that occurred within Enron’s corporate culture played a big part in the company’s eventual bankruptcy. Where were the ethical lapses? What sort of changes could have been made early on in Enron’s internal culture that may have prevented its downfall? Be sure to address: Corporate culture The key players in Enron’s downfall Leadership’s ethical responsibilityGiven that the price in a competitive industry is 100 the firm's total equation is given as TC=50+20q+q2 Determine the firm's total stock revenue,the profit equation, the quantity which maximizes the profit , profit that maximizes the quantityLyft launched its IPO on April 1st 2019 with a share price of $72. Before the IPO, Lyft’s board of directors was likely trying to decide how to compensate CEO Logan Green to provide an incentive for him to increase the firm’s performance and share price after it went public. Let’s say the board was considering two possibilities such that they were deciding between providing one million dollars worth of shares of the firm stock at $72 per share or one million dollars worth of call options with a strike price of $72 and a maturity and vesting date one year after the IPO. To keep things simple, let’s say CEO Logan Green can choose between providing two levels of effort: regular effort or high effort. He has been exerting regular effort all along. He could switch to high effort which would be much more costly for him as he would have to work even longer hours, but the extra effort would likely result in better performance for the firm. The goal of the board’s incentive compensation is to…