Corporate Governance 3rd Edition by Kenneth Kim - Test Bank

Corporate Governance 3rd Edition by Kenneth Kim – Test Bank

Instant Download – Complete Test Bank With Answers

Sample Questions Are Posted Below

Chapter 1: Corporations and Corporate Governance

True / False Questions

F          Capitalism is an economic system of business based on public enterprise.

T          The main goal of a company is to create an environment conducive to earning long-term profits.

F          The owners of corporations act as agents for the firm and bear unlimited personal liability.

T          Solutions to the principal-agent problem are incentives and monitoring.

Multiple Choice Questions

In general, basic forms of business can be ___.

1. a sole proprietorship
2. a partnership
3. a corporation
4. All of the above.
5. None of the above.

The principal-agent problem can be described as:

1. Managers will always try to pursue enough profits to keep stockholders satisfied.
2. The owner acts as the agent of the firm and the manager is the principal who controls the firm.
3. If shareholders cannot effectively monitor the managers’ behavior, managers may be tempted to use the firm’s assets for their own ends.
4. All of the above
5. None of the above.

According to Chapter 1, monitoring groups outside of the company can be all EXCEPT

1. Auditors
2. Board of Directors
3. Investment analysts
4. All of the above are outside monitors.
5. Both a and b.

Which is perhaps the most important advantage of the corporate business form?

1. Easy to start up.
2. Double taxation for shareholders can be avoided.
3. Running a corporation is usually not very expensive.
4. Access to the capital market.
5. None of the above is an important advantage.