Question 1

Central to agency theory is the relationship between two primary players, the principals (stockholders) and agents (management).

Accepted Answer

A) True 
 B)False

Question 2

Director independence and non-interlocking directorships are desirable traits of top-ranked boards. What does this mean?

Accepted Answer

A)   Directors can serve on the board of directors of other related companies.
B)   Directors are free of all ties to the CEO and the company.
C)   The CEO can serve as a director on the other director boards.
D)   Top managers cannot be on the board of directors.

Question 3

Agency theory is concerned with resolving two problems that can occur in agency relationships. Which of the following is not one of those problems?

Accepted Answer

A)   Goals conflict between principals and agents.
B)   Verification of actual agency activity is expensive and difficult to obtain.
C)   Principals and agents have differing attitudes toward risk.
D)   Stockholders and management align with external stakeholders.

Question 4

Which of the following is the primary drawback of traditional strategic control systems?

Accepted Answer

A)   They are only appropriate when the environment is stable and simple.
B)   Goals and objectives cannot be measured with a high level of certainty.
C)   They lead to complacency.
D)   They lack the flexibility needed to adjust to changes in the environment.

Question 5

In addition to traditional institutional investors, a growing set of activist investors aggressively pressure firm managers for major changes. These activist investors include individual investors, such as ________, and activist investor funds, such as ________.

Accepted Answer

A)   CalPERS; Bill Gates
B)   ValuAct; Trian
C)   Berkshire Hathaway; Warren Buffet.
D)   Carl Icahn; Pershing Square.

Question 6

Informational control systems are concerned with which of the following questions?

Accepted Answer

A)   Is the organization doing things right?
B)   Is the organization doing the right things?
C)   Are rules and regulations being followed as information is processed?
D)   Is the environment of the organization a necessary and sufficient condition for success?

Question 7

When subcultures emerge that have shared values opposite from the dominant culture of an organization

Accepted Answer

A)   organizational cohesiveness increases.
B)   information is shared rather than hoarded.
C)   individuals begin working at cross purposes.
D)   individuals gain insights into overarching goals and objectives.

Question 8

In contemporary control systems, data and information generated are best interpreted and discussed in online forums, in order to have traceability of the discussion.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not a reason analyst recommendations are often more optimistic than warranted by an objective analysis of the facts?

Accepted Answer

A)   Many analysts fail to grasp the gravity of the problems facing a company.
B)   Sell recommendations generate lower commissions than buy recommendations.
C)   The firms for which analysts work may have lucrative investment banking relationships with the firm.
D)   Analysts are often pressured by their superiors to overlook negative information.

Question 10

Effective boundaries and constraints

Accepted Answer

A)   tend to inhibit efficiency and effectiveness.
B)   distract employees who are trying to focus on organizational priorities.
C)   minimize improper and unethical conduct.
D)   tend to limit organizational growth.

Question 11

For young managers who see themselves as free agents, behavioral controls such as rewards and culture can be an effective way to enhance organizational loyalty.

Accepted Answer

A) True 
 B)False

Question 12

Top managers at ABC Company meet every Friday to review daily operational reports and year to date data. This is an example of

Accepted Answer

A)   behavioral control.
B)   informational control.
C)   strategy formulation.
D)   strategy implementation.

Question 13

The Lending Club removed CEO Renaud Laplanche in 2016. Hans Morris, the company executive chairman, lauded him, saying his entrepreneurial spirit was critical to the success of the firm. But he also signaled the board was removing Mr. Laplanche because he had failed to build a strong control system and culture, stating that as a public company that provides a financial service, Lending Club must meet the industry high standards of transparency and disclosure. This kind of dismissal signals what message to the public?

Accepted Answer

A)   Mr. Laplanche was not a creative entrepreneur.
B)   The board of directors is active and engaged.
C)   The board of directors needed a scapegoat to cover up their ineffectiveness.
D)   Mr. Laplanche was dishonest.

Question 14

For firms competing in highly unstable and turbulent industries, traditional strategic controls are most appropriate.

Accepted Answer

A) True 
 B)False

Question 15

Rules and regulations, rather than culture or rewards, would be used for strategic control at which type of company?

Accepted Answer

A)   software developer
B)   stock brokerage firm
C)   manufacturer of mass produced products
D)   high tech research facility

Question 16

Once a strong and healthy organizational culture has been established, it becomes self-sustaining.

Accepted Answer

A) True 
 B)False

Question 17

Informational controls involve the balance and alignment of the culture, rewards, and boundaries of a firm.

Accepted Answer

A) True 
 B)False

Question 18

Effective short-term objectives should be ________ and ________.

Accepted Answer

A)   specific; measurable
B)   achievable; not challenging
C)   motivating; not limiting
D)   time defined; not limiting

Question 19

Contemporary approaches to strategic control rely primarily on

Accepted Answer

A)   feedback controls.
B)   single-loop learning.
C)   double-loop learning.
D)   comparative learning.

Question 20

Rule-based controls are least appropriate in organizations with which one of the following characteristics?

Accepted Answer

A)   Environments are stable and predictable.
B)   Employees are highly skilled and independent.
C)   There is consistency in product and service.
D)   The risk of malfeasance is extremely high.

Exam 9: Strategic Control and Corporate Governance

Effective short-term objectives should be and .

Correct Answer
verified

Which of the following is the primary drawback of traditional strategic control systems?

Correct Answer
verified

In addition to traditional institutional investors, a growing set of activist investors aggressively pressure firm managers for major changes. These activist investors include individual investors, such as , and activist investor funds, such as .

Correct Answer
verified

Rules and regulations, rather than culture or rewards, would be used for strategic control at which type of company?

Correct Answer
verified

When subcultures emerge that have shared values opposite from the dominant culture of an organization

Correct Answer
verified

In contemporary control systems, data and information generated are best interpreted and discussed in online forums, in order to have traceability of the discussion.

Correct Answer
verified

Once a strong and healthy organizational culture has been established, it becomes self-sustaining.

Correct Answer
verified

For young managers who see themselves as free agents, behavioral controls such as rewards and culture can be an effective way to enhance organizational loyalty.

Correct Answer
verified

Correct Answer
verified

Top managers at ABC Company meet every Friday to review daily operational reports and year to date data. This is an example of

Correct Answer
verified

Contemporary approaches to strategic control rely primarily on

Correct Answer
verified

Which of the following is not a reason analyst recommendations are often more optimistic than warranted by an objective analysis of the facts?

Correct Answer
verified

Central to agency theory is the relationship between two primary players, the principals (stockholders) and agents (management).

Correct Answer
verified

Informational control systems are concerned with which of the following questions?

Correct Answer
verified

Rule-based controls are least appropriate in organizations with which one of the following characteristics?

Correct Answer
verified

Informational controls involve the balance and alignment of the culture, rewards, and boundaries of a firm.

Correct Answer
verified

Director independence and non-interlocking directorships are desirable traits of top-ranked boards. What does this mean?

Correct Answer
verified

Agency theory is concerned with resolving two problems that can occur in agency relationships. Which of the following is not one of those problems?

Correct Answer
verified

For firms competing in highly unstable and turbulent industries, traditional strategic controls are most appropriate.

Correct Answer
verified

Effective boundaries and constraints

Correct Answer
verified

Exam 9: Strategic Control and Corporate Governance

Effective short-term objectives should be ________ and ________.

Correct AnswerverifiedShow Answer

Which of the following is the primary drawback of traditional strategic control systems?

Correct AnswerverifiedShow Answer

In addition to traditional institutional investors, a growing set of activist investors aggressively pressure firm managers for major changes. These activist investors include individual investors, such as ________, and activist investor funds, such as ________.

Correct AnswerverifiedShow Answer

Rules and regulations, rather than culture or rewards, would be used for strategic control at which type of company?

Correct AnswerverifiedShow Answer

When subcultures emerge that have shared values opposite from the dominant culture of an organization

Correct AnswerverifiedShow Answer

In contemporary control systems, data and information generated are best interpreted and discussed in online forums, in order to have traceability of the discussion.

Correct AnswerverifiedShow Answer

Once a strong and healthy organizational culture has been established, it becomes self-sustaining.

Correct AnswerverifiedShow Answer

For young managers who see themselves as free agents, behavioral controls such as rewards and culture can be an effective way to enhance organizational loyalty.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Top managers at ABC Company meet every Friday to review daily operational reports and year to date data. This is an example of

Correct AnswerverifiedShow Answer

Contemporary approaches to strategic control rely primarily on

Correct AnswerverifiedShow Answer

Which of the following is not a reason analyst recommendations are often more optimistic than warranted by an objective analysis of the facts?

Correct AnswerverifiedShow Answer

Central to agency theory is the relationship between two primary players, the principals (stockholders) and agents (management).

Correct AnswerverifiedShow Answer

Informational control systems are concerned with which of the following questions?

Correct AnswerverifiedShow Answer

Rule-based controls are least appropriate in organizations with which one of the following characteristics?

Correct AnswerverifiedShow Answer

Informational controls involve the balance and alignment of the culture, rewards, and boundaries of a firm.

Correct AnswerverifiedShow Answer

Director independence and non-interlocking directorships are desirable traits of top-ranked boards. What does this mean?

Correct AnswerverifiedShow Answer

Agency theory is concerned with resolving two problems that can occur in agency relationships. Which of the following is not one of those problems?

Correct AnswerverifiedShow Answer

For firms competing in highly unstable and turbulent industries, traditional strategic controls are most appropriate.

Correct AnswerverifiedShow Answer

Effective boundaries and constraints

Correct AnswerverifiedShow Answer

Effective short-term objectives should be and .

Correct Answer
verified

Correct Answer
verified

In addition to traditional institutional investors, a growing set of activist investors aggressively pressure firm managers for major changes. These activist investors include individual investors, such as , and activist investor funds, such as .

Correct Answer
verified

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