The underlying economic theory regarding many corporate governance issues is the principal-agency relationship between the senior managers and the shareholders of corporations. Explain this relationship
What will be an ideal response?
Standard agency theory advocates that principals must monitor agent's to insure that they will properly carry out their duties. In our situation, the agent is senior managers who are charged with the responsibility of acting on behalf of the principal (who are the shareholders of the corporation). There is the potential for the senior managers not to pursue the best interest of the shareholders, but instead pursue a policy in their own self-interest. This policy may include a variety of behaviors including the use of company resources for their own enjoyment, doctoring the books to achieve a stock price to maximize their benefits through a salary increase or exercise of expiring stock options. To help alleviate this problem, the principals try to align incentives so as to maximize stockholder value. This cannot be done without costs. The costs of monitoring the agent's behavior are called agency costs.
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What a product or service is worth to a customer is the:
A) brand value. B) customer value. C) profit potential. D) market potential.
Skyrim Corp. lacks the capital and capacity to launch its new helicopter for full national and international distribution. If the test market results look promising, what should be management's next step?
A) retest the product in additional markets B) develop a planned market rollout over time C) liquidate its assets to gain capital and capacity D) seek the help of a nationally known consultant E) develop a prototype
Describe the sources of risk described in the chapter (liquidity, operating, financial, and worst-case scenarios).
What will be an ideal response?
During this phase of design thinking, ideas generated through the ideation process are transformed into concrete actions.
a. action phase b. concretization phase c. ideation phase d. implementation phase