Question 1

External governance control mechanisms include all of the following except

Accepted Answer

A)  auditors.
B)  analysts.
C)  competitors.
D)  media.E) C) and D)
F) B) and C)

Question 2

Behavioral controls involve the ability to respond effectively to environmental change.

Accepted Answer

A) True 
 B)False

Question 3

In contemporary control systems, data and information generated are best interpreted and discussed in online forums, in order to have traceability of the discussion.

Accepted Answer

A) True 
 B)False

Question 4

In trying to assure that managerial actions lead to shareholder value maximization, a risk can come about if the market value of a firm becomes less than its book value. The risk is

Accepted Answer

A)  it becomes an attractive takeover target.
B)  the firm will be delisted by the stock exchange.
C)  the Securities and Exchange Commission will not allow it to declare dividends until the market value once again exceeds the book value.
D)  the firm will be unable to service its debt.E) A) and D)
F) C) and D)

Question 5

Rules and regulations are examples of ______________ and _____________.

Accepted Answer

A)  controls; behaviors
B)  controls; norms
C)  boundaries; behaviors
D)  boundaries; constraintsE) B) and C)
F) A) and C)

Question 6

Rules and regulations, rather than culture or rewards, would be used for strategic control at which type of company?

Accepted Answer

A)  software developer
B)  stock brokerage firm
C)  manufacturer of mass produced products
D)  high tech research facilityE) A) and D)
F) All of the above

Question 7

Lack of a clear understanding of organizational goals and objectives is a probable cause of

Accepted Answer

A)  productive behavior.
B)  counterproductive motivation.
C)  counterproductive behavior.
D)  motivated self-interest.E) B) and C)
F) All of the above

Question 8

Expropriation of minority shareholders means that minority shareholders

Accepted Answer

A)  must sell their shares upon demand.
B)  cannot own shares in foreign firms.
C)  do not receive dividends.
D)  are adversely affected by the actions of controlling shareholders.E) B) and C)
F) A) and C)

Question 9

For a reward system to be effective, it must be perceived as fair and equitable.

Accepted Answer

A) True 
 B)False

Question 10

The failure of many auditing firms to raise red flags about accounting irregularities in companies such as Enron and WorldCom is generally attributed to all of the following factors except the

Accepted Answer

A)  desire to get future auditing contracts from the company.
B)  desire to get consulting work from the company because most audit firms also do consulting work.
C)  fact that auditors are appointed by the firm.
D)  failure of U.S. audit firms to hire technically qualified professionals.E) C) and D)
F) B) and D)

Question 11

In choosing sides concerning CEO duality, two schools of thought exist. Which of the following would not be a consideration for the agency theory school of thought?

Accepted Answer

A)  CEO duality complicates the issue of CEO succession.
B)  CEO duality reinforces popular doubts about the legitimacy of the system as a whole.
C)  CEO duality can create conflicts of interest that can negatively affect the interests of the shareholders.
D)  Firm performance always is improved under CEO duality.E) A) and B)
F) A) and C)

Question 12

The corporate governance premium is smaller for firms in countries with sound corporate governance practices compared to countries with weaker corporate governance standards.

Accepted Answer

A) True 
 B)False

Question 13

A corporation is a mechanism created to allow different parties to contribute capital, expertise, and labor for the maximum benefit of each party. Management is able to participate in the profits of the enterprise without taking direct responsibility for the operations.

Accepted Answer

A) True 
 B)False

Question 14

Unexpected events have little effect on short-term objectives because short-term objectives are not changeable.

Accepted Answer

A) True 
 B)False

Question 15

Contemporary approaches to strategic control rely primarily on

Accepted Answer

A)  feedback controls.
B)  single-loop learning.
C)  double-loop learning.
D)  comparative learning.E) None of the above
F) A) and B)

Question 16

The best way to minimize improper and unethical conduct is to ________ and _______.

Accepted Answer

A)  set boundaries; constraints
B)  establish standards; guidelines
C)  develop policies; regulations
D)  design sanctions; guidelinesE) A) and B)
F) A) and C)

Question 17

According to research on a broad range of companies, boards of directors that have the skills and knowledge to advise CEOs on potential key strategic initiatives add risk more than value to the firm.

Accepted Answer

A) True 
 B)False

Question 18

Effective boundaries and constraints

Accepted Answer

A)  tend to inhibit efficiency and effectiveness.
B)  distract employees who are trying to focus on organizational priorities.
C)  minimize improper and unethical conduct.
D)  tend to limit organizational growth.E) B) and D)
F) B) and C)

Question 19

In single-loop learning, the assumptions, premises, goals, and strategies of the organization are continuously monitored, tested, and reviewed.

Accepted Answer

A) True 
 B)False

Question 20

For young managers who see themselves as free agents, behavioral controls such as rewards and culture can be an effective way to enhance organizational loyalty.

Accepted Answer

A) True 
 B)False

Exam 9: Strategic Control and Corporate Governance

For young managers who see themselves as free agents, behavioral controls such as rewards and culture can be an effective way to enhance organizational loyalty.

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Rules and regulations are examples of ______________ and _____________.

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The corporate governance premium is smaller for firms in countries with sound corporate governance practices compared to countries with weaker corporate governance standards.

Correct AnswerverifiedShow Answer

In single-loop learning, the assumptions, premises, goals, and strategies of the organization are continuously monitored, tested, and reviewed.

Correct AnswerverifiedShow Answer

Effective boundaries and constraints

Correct AnswerverifiedShow Answer

According to research on a broad range of companies, boards of directors that have the skills and knowledge to advise CEOs on potential key strategic initiatives add risk more than value to the firm.

Correct AnswerverifiedShow Answer

For a reward system to be effective, it must be perceived as fair and equitable.

Correct AnswerverifiedShow Answer

In choosing sides concerning CEO duality, two schools of thought exist. Which of the following would not be a consideration for the agency theory school of thought?

Correct AnswerverifiedShow Answer

A corporation is a mechanism created to allow different parties to contribute capital, expertise, and labor for the maximum benefit of each party. Management is able to participate in the profits of the enterprise without taking direct responsibility for the operations.

Correct AnswerverifiedShow Answer

Contemporary approaches to strategic control rely primarily on

Correct AnswerverifiedShow Answer

Lack of a clear understanding of organizational goals and objectives is a probable cause of

Correct AnswerverifiedShow Answer

The failure of many auditing firms to raise red flags about accounting irregularities in companies such as Enron and WorldCom is generally attributed to all of the following factors except the

Correct AnswerverifiedShow Answer

Rules and regulations, rather than culture or rewards, would be used for strategic control at which type of company?

Correct AnswerverifiedShow Answer

Expropriation of minority shareholders means that minority shareholders

Correct AnswerverifiedShow Answer

External governance control mechanisms include all of the following except

Correct AnswerverifiedShow Answer

In trying to assure that managerial actions lead to shareholder value maximization, a risk can come about if the market value of a firm becomes less than its book value. The risk is

Correct AnswerverifiedShow Answer

Behavioral controls involve the ability to respond effectively to environmental change.

Correct AnswerverifiedShow Answer

In contemporary control systems, data and information generated are best interpreted and discussed in online forums, in order to have traceability of the discussion.

Correct AnswerverifiedShow Answer

Unexpected events have little effect on short-term objectives because short-term objectives are not changeable.

Correct AnswerverifiedShow Answer

The best way to minimize improper and unethical conduct is to ________ and _______.

Correct AnswerverifiedShow Answer

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Rules and regulations are examples of __ and _.

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The best way to minimize improper and unethical conduct is to __ and _.

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