Chapter 3

Good Essays
CHAPTER 4 CORPORATE GOVERNANCE AROUND THE WORLD
SUGGESTED ANSWERS AND SOLUTIONS TO END-OF-CHAPTER
QUESTIONS AND PROBLEMS

Questions

1. The majority of major corporations are franchised as public corporations. Discuss the key strength and weakness of the ‘public corporation’. When do you think the public corporation as an organizational form is unsuitable?

Answer: The key strength of the public corporation lies in that it allows for efficient risk sharing among investors. As a result, the public corporation may raise a large sum of capital at a relatively low cost. The main weakness of the public corporation stems from the conflicts of interest between managers and shareholders.

2. The public corporation is owned by multitude of shareholders but managed by professional managers. Managers can take self-interested actions at the expense of shareholders. Discuss the conditions under which the so-called agency problem arises.

Answer: The agency problem arises when managers have control rights but insignificant cash flow rights. This wedge between control and cash flow rights motivates managers to engage in self-dealings at the expense of shareholders.

3. Following corporate scandals and failures in the U.S. and abroad, there is a growing demand for corporate governance reform. What should be the key objectives of corporate governance reform? What kind of obstacles can there be thwarting reform efforts?

Answer: The key objectives of corporate governance reform should be to strengthen shareholder rights and protect shareholders from expropriation by corporate insiders, whether managers or large shareholders. Controlling shareholders or managers do not wish to lose their control rights and thus resist reform efforts.

4. Studies show that the legal protection of shareholder rights varies a great deal across countries. Discuss the possible reasons why the English common law tradition provides the

You May Also Find These Documents Helpful

  • Powerful Essays

    CHAPTER 3

    • 666 Words
    • 4 Pages

    CHAPTER 3 METHODOLOGY RESEARCH AND DESIGN Methodology and Design used for this specific study will be based on the qualitative design methods, which include interviews of the students of Asian Institute of Computer Studies. This study utilized the descriptive method of research. As widely accepted, the descriptive method of research is a fact-finding study that involves adequate and accurate interpretation of findings. This chapter presents a detailed outline of how an investigation will take…

    • 666 Words
    • 4 Pages
    Powerful Essays
  • Good Essays

    Chapter 3

    • 618 Words
    • 3 Pages

    Chapter 3 RESEARCH METHODOLOGIES This chapter deals with the research design, research respondents, sampling procedure, research locale, research instrument, data gathering procedure, scoring procedure, reliability and validity of instrument and statistical treatment. Research Design This study used the descriptive method of research. It is a method designed to describe the data and characteristics about what is being studied. Descriptive research, also known as statistical research, describes…

    • 618 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    Chapter 3

    • 471 Words
    • 2 Pages

    CHAPTER 3 1. A fundamental component of the IS infrastructure is the ____________, that is, the computers that run the applications and databases necessary for processing transactions or analyzing business data. Hardware 2. With respect to the five general classes of computer,_________ are typically used for mission critical applications, such as transaction processing. Mainframes 3. Which of the following is a difference between a server and a workstation? A workstation is typically used by one…

    • 471 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Chapter 3

    • 753 Words
    • 4 Pages

    End-of-Chapter Questions (3-2) Financial ratio analysis is conducted by managers, equity investors, long-term creditors and short-term creditors. What is the primary emphasis of each of these groups in evaluating ratios? Managers deal with all types of ratios. It is important for them to judge and improve the overall financial position of the company. Financial ratios are one of the most common tools of managerial decision making. Financial ratios involve the comparison of various figures from…

    • 753 Words
    • 4 Pages
    Good Essays
  • Better Essays

    3 Chapters

    • 3347 Words
    • 14 Pages

    CHAPTER I INTRODUCTION Peel waste are highly perishable and seasonal, is a problem to the processing industries and pollution monitoring agencies. There is always an increased attention in bringing useful products from waste materials and citrus wastes are no exceptions. Suitable methods have to be adopted to utilize them for the conversion into value-added products [Nand, (1998)]. Pectin exists in varying amounts in fruit cell walls and has important nutritional and technological properties…

    • 3347 Words
    • 14 Pages
    Better Essays
  • Powerful Essays

    chapter 3

    • 2740 Words
    • 11 Pages

    CHAPTER 3 Research methodology 3.1 INTRODUCTION This chapter deals with the research methodology of the study, including the research design, setting, population, sample and data-collection instrument. 3.2 RESEARCH DESIGN Polit and Hungler (1999:155) describe the research design as a blueprint, or outline, for conducting the study in such a way that maximum control will be exercised over factors that could interfere with the validity of the research results. The research design…

    • 2740 Words
    • 11 Pages
    Powerful Essays
  • Satisfactory Essays

    Chapter 3

    • 478 Words
    • 2 Pages

    Lisette Negron Chapter 3: Analyzing Managerial Decisions: Property Right Security in Russian Deprivatization. Instructor: Dr. James Larriviere Saint Leo University 5 July 2015 (1) What impact will the prospect of deprivatization have on investment by managers of privatized firms? It will cause a devastating situation to privatized firms managers, it will greatly affect the structure and the projected strategic plan. They invest time and money including hiring staff to accomplish the project;…

    • 478 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    chapter 3

    • 1653 Words
    • 7 Pages

    Chapter 3 RESEARCH METHODOLOGY Introduction In this chapter the research methodology used in the study is described. The geographical area where the study was conducted the study design and the population and sample are described. The instrument used to collect the data, including methods implemented to maintain validity and reliability of the instrument, are described. Research Approach and Design Denzin and Lincoln (2000) suggest a different, more complex definition. Their definition, which…

    • 1653 Words
    • 7 Pages
    Powerful Essays
  • Powerful Essays

    Chapter 3

    • 6140 Words
    • 33 Pages

    Chapter 3 Student: ___________________________________________________________________________ 1. According to the opening case McDonalds was able to succeed in India because of: A. India 's love of beef. B. India 's love of pork. C. relationship networks. D. customers wanted the "American" experience. E. collective help 2. _______ is an understanding of how cultural differences across and within nations can affect the way in which business is practiced. A. Cross-cultural literacy B. Cultural…

    • 6140 Words
    • 33 Pages
    Powerful Essays
  • Good Essays

    Chapter 3

    • 1583 Words
    • 13 Pages

    Crane and Matten Business Ethics (3rd Edition) Chapter 3 Evaluating Business Ethics: Normative Ethical Theories Lecture 3 Overview • Locate the role of ethical theory • Highlight international differences in perspectives • Provide critical overview of traditional ethical theories • Explore contemporary ethical theories What are normative ethical theories? • Ethical theories are the rules and principles that determine right and wrong for any given situation Crane and Matten (2010) • Normative…

    • 1583 Words
    • 13 Pages
    Good Essays