Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Question
The likelihood that managers may place personal goals ahead of corporate goals is called an:
a.
agency problem
b.
stakeholder adversity
c.
strategic advantage
d.
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- The reduction in profit arising from the actions of managers being self-serving or possible conflict of interest can best be attributed to.…........….….. • A. Agency cost • B. Tangible expense • C. Agency theory • D. Agency problemarrow_forwardAccording to the COSO ERM framework, which of following best describes the difference between strategy and business objectives? A. Strategy is the plan to achieve business objectives. B. Business objectives are the steps to achieve strategy. C. Strategy is the organization’s core purpose, and business objectives are what the organization aspires to achieve over time. D. Business objectives are broader in scope than strategy.arrow_forwardHow can a balanced scorecard be used to address Corporate Social Responsibility objectives?arrow_forward
- Agency theory suggests that one way to motivate managers to act in the best interests of the owners/shareholders is to link managerial compensation to firms' payoffs, such as net income or share returns. However, such a linkage imposes risk on the manager. Required: (1) Why is it important to control or reduce some of the risk thus imposed on managers? Explain. Discuss two methods by which risk imposed on the managers could be reduced.arrow_forwardManagerial decision making in accounting requires careful analysis of quantitative data on areas such as relevant and irrelevant costs. However, qualitative factors also play a role in making such decisions. For this forum, identify some qualitative factors that should be considered when making managerial decisions. Explain why and how these qualitative factors impact the managerial decision making process.arrow_forwardCEO compensation design is effective in controlling the behavior in their decision making. How a compensation package could possibly work in adjusting a CEO’s risk taking behavior (in investments) and in balancing long-term vs. short term interests of a company?arrow_forward
- The tension between the interests of the CEO and the interests of long-term stakeholders helps to explain why: Group of answer choices A. Conflicts of interest can easily happen. D. Both A & B B. Boards of directors need to maintain their independence from executives. C. Absence of agency risk is apparent.arrow_forwardhow the balanced scorecard concept and system can help companies to drive and measure performance and deliver its corporate responsibility commitments?arrow_forwardExplainarrow_forward
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