PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Question
Chapter 33, Problem 7PS
a)
Summary Introduction
To explain: If the given statement is true or false.
b)
Summary Introduction
To explain: If the given statement is true or false.
c)
Summary Introduction
To explain: If the given statement is true or false.
d)
Summary Introduction
To explain: If the given statement is true or false.
e)
Summary Introduction
To explain: If the given statement is true or false.
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Students have asked these similar questions
Independent business units are a common choice for corporate ventures, but what is a significant drawback?
A. Isolation of risk to the corporation
B. Require less direct monitoring
OC. Allow venture to focus
D. Sharing resources and personnel
2 (a)There is a conflict of interest between stockholders and managers. In theory, stockholders are expected to exercise control over managers through the annual meeting or the board of directors. In practice, why might these disciplinary mechanisms not work?
(b)There are some corporate strategists who have suggested that firms focus on maximizing market share rather than market prices. When might this strategy work, and when might it fail?
(c)It is often argued that managers, when asked to maximize stock price, have to choose between being socially responsible and carrying out their fiduciary duty. Do you agree? Can you provide an example where social responsibility and firm value maximization go hand in hand?
As for the outsourcing of multinational companies, please talk about the language and cultural differences, as well as the political risks that complicate the financial management of multinational companies.
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- What business risks does Toll Brothers face that may threaten the company’s ability tosatisfy stockholder expectations? What are some examples of control activities that thecompany could use to reduce these risks? (Hint: Focus on pages 10–11 of the 10-K.)arrow_forwardWhich of the following statements is true? a. Restrictive covenants in debt agreements are an effective way to reduce agency conflicts between stockholders and managers. b. Managers generally welcome hostile takeovers since they often increase the company’s stock price. None of the choices is correct. c. One advantage of organizing your business as a corporation is that your shareholders are not subject to limited liability. d. An effective ethics program can enhance corporate value by producing a number of positive benefits like building shareholder confidence.arrow_forwardWhich of the following does not help align managerial and shareholder incentives? Question options: a) Market for Corporate Control b) Product Market Competition c) Antitrust Law d) Corporate Law e) Markets for Directorsarrow_forward
- Which of the following methods would be most likely to decrease the agency problems by helping motivate managers to act in the best interests of shareholders? 1. Increase the proportion of executive compensation that comes from stock options and reduce the proportion that is paid as cash salaries. 2. Eliminate a requirement that members of the board of directors have a substantial investment in the firm's stock. 3. Decrease the use of restrictive covenants in bond agreements. 4. Take actions that reduce the possibility of a hostile takeover. 5. Elect a board of directors that allows managers greater freedom of action.arrow_forwardCompany M wants to enter country XYZ to expand its customer base. Company M intends to maintain some control in the foreign market but does not want to spend large amounts of money. Which entry mode is best for Company M? O a joint ventures Ob. acquisitions Ogreenfield operations Od. exportsarrow_forwardWhich of the following are correct descriptions of large corporations? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) check all that apply Managers no longer have the incentive to act in their own interests.unanswered The corporation survives even if managers are dismissed.unanswered Shareholders can sell their holdings without disrupting the business.unanswered Corporations, unlike sole proprietorships, do not pay tax; instead, shareholders are taxed on any dividends they receive.arrow_forward
- Select the INCORRECT statement: The aim of ensuring good corporate governance is... Select one: 1.Better understand and isolate the causes of market crashes 2.To ensure investor protection 3.To maximise corporate transparency Prevent market disruptions resulting from corporate collapse 4.Prosecute shareholders for allowing high risk business decisions that resulted in corporate collapsearrow_forwardWhich of the following statements is correct? Group of answer choices Corporations and partnerships have an advantage over proprietorships because a sole proprietor is subject to unlimited liability, but investors in the other types of businesses are not. Firms in highly competitive industries find it easier to exercise "social responsibility" than do firms in oligopolistic industries. A good goal for a corporate manager is maximization of expected EPS. A good example of an agency relationship is the one between stockholders and managers. Most business in the U.S. is conducted by corporations; corporations' popularity results primarily from their favorable tax treatment.arrow_forwardThe success of any organization heavily depends on the efficiency of the corporate governance. The only way to know the status of success or failure can be found _________________. a. None of the options b. By observing at the number of directors in the board of directors c. By providing a complete internal control report d. By looking at the financial results of the corporationarrow_forward
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