Identify all of the correct statements: a. Managers act in their own interests, and so there is no way to align their interests with those of the owners b. None of the answers are correct C. To motivate managers in non-profit firms, no employee incentives are needed d. Managers naturally seek to maximize shareholders' wealth To align the interests of managers and owners, owners must design systems to monitor and reward management behavior that increases the firm's profits e.

Identify all of the correct statements: a. Managers act in their own interests, and so there is no way to align their interests with those of the owners b. None of the answers are correct C. To motivate managers in non-profit firms, no employee incentives are needed d. Managers naturally seek to maximize shareholders' wealth To align the interests of managers and owners, owners must design systems to monitor and reward management behavior that increases the firm's profits e.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

Problem 5MC: Performance measures are only useful if _______. A. there are both controllable and uncontrollable...

See similar textbooks

Similar questions

What is one of the ways that accounting is used to direct and control the manager of a corporation? a.Threatening to tell shareholders a mangers income if a manager makes a ‘poor financial’ decision. b.Linking of a mangers performance to a bonus that depends on accounting profit. c.Making decisions based on the accounting information regardless of managerial input. d.Using income smoothing to assure a manager that they can invest in a low risk investment.
PLEASE IDENTIFY AN ORGANIZATION If a firm is performing poorly financially, what might this say about the differentiators, arenas, or both? Use a specific organization as an example and apply Hambrick and Frederickson's Strategy Diamond in your response.
agency costs may occur if A. Managers make decisions for their own best interest B. Managers may not attempt to maximize the value of the firm to shareholders C. The board does not properly oversee the activities and decisions of managers D.all of the above
Which of the following is an example of the agency problem? a. Managers always invest in projects that have appropriate returns and that will increase shareholder wealth. b. Managers resign when they believe they have not always acted in the best interests of shareholders. c. Managers conduct an acquisition program purely to increase the size of an organisation. d. Managers look for new projects as they want to avoid business risk. Clear my choice
Which of the following best describes the potential impact of business risk on Earnings Quality? Select one: a. Business risk is mostly composed of financial risk factors and it has minimal effect on earnings quality. b. Higher earnings quality is linked with companies more insulated from business risk. While business risk is not primarily a result of management’s discretionary actions, this risk can be lowered by skillful management strategies.' c. A higher level of earnings quality can be observed in the industries with high business risk, because higher risk means higher returns d. For managing business risk, the managers almost have no discretion, therefore business risk is not directly or indirectly related to earnings quality.
Which of the following are examples of financial objectives that a company might choose to pursue? A Provision of good wages and salaries B Restricting the level of gearing to below a specified target C Dealing honestly and fairly with customers on all occasions D Producing environmentally friendly products Which of the following is true? A Management accounting is highly regulated B Financial accounting is highly regulated C Management accounting is externally focused D Financial accounting is only internally communicated Which of the following is NOT a connected stakeholder? A Shareholders B Customers C Competitors D Local community…
Within the context of financial management, it is important that organizations attempt to align their managers' interests with that of the shareholders. In Chapter 16, Berk and DeMarzo (2020) provide several examples of agency conflict or a conflict between the owners and the management of a firm. Examples of these are: (a) at times managers will take on less (greater) risk than they would if they were the owners of the firm and (b) due to the separation of ownership and control managers are able to entrench themselves within firms and have little risk of being replaced. Provide a few examples of mechanisms that organizations could use to align the interests of both the owners of the firm and its managers.
Which one of the following characteristics of the positive accounting theory brings forward the problem of Opportunistic Behavior? Oa. It wants to minimize costs associated with contracts of the firm. O b. It recognizes the flexibility in choosing accounting policies by the firm. O c. It recognizes the existence of economic consequences in the firm. O d. It aims to maximize the prospects for survival of the firm.
A well-run company should align the management’s interest and with the owner’s interests. What are some actions that stockholders can take to ensure that management’s and stockholders’ interests are aligned? Is this important? What are some of the risks/consequences if the management’s interests are not aligned with the owners?
Which of the following are true statements on the principal-agent problem between corporate managers and shareholders: O Owners can ensure that the managers are actng as desired O Corporate governance will resolve the problem with certainty O There may be considerable leeway for owners to serve their own interests Managers usually have better information than owners This process is banned on the stock market There may be considerable leeway for managers to serve their own interests There is no other way for companies to raise money It relates to the business model
62) Agency Theory suggests: A) The interests of the managers are aligned with the interest of stockholders. B) The management is focuses on looking after its own self interest rather than focusing on the interest of the stockholders. c) Managers would never spend stockholder money on their own comforts. d) Stockholders reward managers with larger office space and many incentives to encourage them to perform well.
Financial managers shouldconsider this when.improving thefinancials of the firm A. that the overall goal is the maximization of the market value of the equity through improved income and cashflows.B. that cost minimization is the primary concern of the firm.C. that exposing the firm to the most risk for the most return should be priority.D. that the personal goals of customer and employees are above the goals of the shareholders.