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


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.

E) None of the above
F) B) and D)

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B

Chesapeake Energy set a goal to improve workplace safety.To reinforce this,one year it gave out over 8 million USD in safety bonuses to over 6000 employees for following safe work practices.This served to create


A) happy employees because they got more free time.
B) an effective reward and incentive program because it reinforced commitment to goals.
C) a new mission statement for the company.
D) an effective incentive program because employees worked harder.

E) All of the above
F) B) and D)

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B

In 2016,John Stumpf,CEO of Wells Fargo,was forced to resign after both stakeholder and government scrutiny of the practices of the firm.Firm management had instituted very aggressive sales goals for employees,leading employees to create sham accounts using the names and money of the real customers of the bank.This is an example of ________ corporate governance.


A) sound
B) controlled
C) flawed
D) guided

E) A) and C)
F) All of the above

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Lack of a clear understanding of organizational goals and objectives is a probable cause of


A) productive behavior.
B) counterproductive motivation.
C) counterproductive behavior.
D) motivated self-interest.

E) A) and B)
F) A) and C)

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Expropriation of minority shareholders means that minority shareholders


A) must sell their shares upon demand.
B) cannot own shares in foreign firms.
C) do not receive dividends.
D) are adversely affected by the actions of controlling shareholders.

E) A) and C)
F) A) and B)

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


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.

E) A) and C)
F) A) and D)

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According to the Business Roundtable,representing the largest U.S.corporations,the most important quality of a good board of directors is that they do not get involved in critiquing company strategies.

A) True
B) False

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


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?

E) A) and D)
F) A) and B)

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Effective boundaries and constraints


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.

E) C) and D)
F) B) and C)

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While there are 20 percent more companies in the United States than the mid-1990s,the number of firms that are publicly traded on a major stock exchange has dropped 45 percent compared to 1995.Which of the following is one of the reasons why?


A) Stock exchange fees are too high.
B) Firm managers want more money for themselves.
C) It lessens the threat of hostile takeovers.
D) It permits managers the freedom to think shorter term.

E) A) and B)
F) A) and C)

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All the following are types of information that a firm is required to disclose except


A) quarterly and annual filings of financial information.
B) stock trading by insiders.
C) details of new products under development.
D) details of executive compensation packages.

E) A) and B)
F) None of the above

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C

Which of the following is not a key control lever of behavioral control?


A) structure
B) culture
C) rewards
D) boundaries

E) C) and D)
F) A) and D)

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One of the most critical roles of the board of directors is to create incentives that align the interests of the CEO and top executives with the interests of shareholders.

A) True
B) False

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


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

E) B) and C)
F) C) and D)

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


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.

E) B) and C)
F) B) and D)

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Ritz-Carlton hotels employees meet each day for 15 minutes to share stories about how they went the extra yard to meet customer needs.What is the intended outcome of these activities?


A) Stories help build a customer-centric culture.
B) Storytime gives employees an opportunity to vent their frustrations.
C) Storytime demonstrates to employees the importance of articulating explicit goals and objectives.
D) Storytime gives management more control over employees.

E) A) and B)
F) C) and D)

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CEO duality refers to a situation in which the CEO


A) formulates and implements strategies.
B) serves as both the CEO and the chair of the board of directors.
C) is responsible for acting as CEO and serving on the compensation committee.
D) is responsible for acting as CEO and Chief Operating Officer (COO) .

E) C) and D)
F) B) and C)

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In addition to an annual base salary of 1.3 million USD and 10.4 million USD in stock compensation and bonuses,Heather Bresch,CEO of Mylan Pharmaceuticals,also received 6.4 million USD in other compensation in 2015.This included 19,200 USD for the use of a company-provided automobile and 310,000 USD in personal use of the company jet.Which of the following statements is true regarding this situation?


A) Shareholders favor diversification.
B) Executives favor diversification.
C) Top level managers always act in the shareholder interest.
D) Top level managers may pursue their own interests over that of the company.

E) B) and D)
F) B) and C)

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Individual rationality ________ organizational rationality.


A) is a good indicator of
B) will ensure
C) is often the opposite of
D) does not always guarantee

E) A) and D)
F) B) and C)

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In single-loop learning,the assumptions,premises,goals,and strategies of the organization are continuously monitored,tested,and reviewed.

A) True
B) False

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