LOS f: Explain the social responsibilities of the corporation in a "stakeholder society" and evaluate the advantages and disadvantages of a corporate governance structure based on stakeholder rather than shareholder interests.
Q1. Which of the following statements regarding advantages and disadvantages in a stakeholder society is least accurate?
A) Profits are sacrificed in the short term for increased shareholder wealth in the long-run.
B) Stockholders and creditors may be hesitant to invest fearing that gains must be shared with other stakeholders.
C) Taxes are distributed more equitably under a stakeholder society than a shareholder society.
Q2. Which of the following is NOT representative of a firm in a stakeholder society?
A) Employees are treated fairly and given extra benefits such as child care and extra family time off which makes them feel more secure and part of a community.
B) Because the firm is viewed favorably by the community it is extended tax breaks and favorable terms by creditors and suppliers.
C) Managers of the firm are under greater control by the stakeholders. |