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LOS a: Explain the ways in which management may act that are not in the best interest of the firm's owners (moral hazard) and illustrate how dysfunctional corporate governance can lead to moral hazard.
Q1. Which of the following statements regarding corporate governance is least accurate?
A) Managers use accounting manipulations to their benefit.
B) The cross holding of shares in Asia has enabled managers to more effectively thwart takeovers.
C) Shareholders would prefer managers reject hostile takeovers.
Q2. Which of the following statements regarding inadequacies in corporate governance is least accurate?
A) If managers were paid using stock-based compensation, the level of executive pay could be reduced.
B) Stock prices often drop when investments are announced.
C) Shareholders are often ignorant of managerial compensation details.
Q3. Which of the following statements regarding corporate governance is least accurate?
A) European laws have helped managers avoid takeovers.
B) Recent financial scandals have focused mostly on managers’ insufficient effort.
C) Moral hazard problems occur because the owners of the firm often have a distant relationship with the firm’s management. | 
发表于 2009-3-10 15:14
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