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Question
How can high exit costs increase the chance that firms may continue to operate for at least a while when operating at a loss? Explain by giving examples.
Answer
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Related questions
Q:
In order to tap into a larger pool of capital, Firm A _______ its shares on the stock exchanges in two foreign countries.
a. Cross-lists.
b. Tunnels.
c. Diffuses.
d.
Q:
Which are NOTamong the aspects of globalization?
a. Contact with different governance norms.
b. FPI investors demand more protection.
c. The focus on governance has been replaced by a focus on shareholder value.
d. The global diffusion of best practices.
Q:
Institution-based considerations in governance include all of the following EXCEPT:
a. Formal institutional framework.
b. International experience of senior executives.
c. Impact of informal norms and values.
d. Lack of legal protection and its impact regarding large shareholders in emerging economies.
Q:
In light of industry-based considerations, governances practices need to:
a. Follow universal best practices.
b. Increase the number of outside directors for firms in high-growth turbulent industries.
c. Create a fit with the nature of the firms industry.
d. Move toward CEO duality in slow-growth stable industries.
Q:
Which of the following is true of AngloAmerican corporate governance systems but not true of GermanJapanese systems?
a. It is bank-oriented and network-based.
b. It relies mostly on exit-based external systems.
c. It could be described as stakeholder capitalism.
d. It is a highly developed successful economy.
Q:
In recent years, CEO duality has:
a. Is no longer allowed for firms operating in the United States.
b. Increased from 12% in 2002 to 48% in 2010.
c. Become a less common practice among firms around the world.
d. Decreased based on conclusive research evidence showing it is less effective than nonduality.
Q:
In regard to family ownership, all of the following are true EXCEPT:
a. Most small firms in the world are owned and controlled by families.
b. The vast majority of large corporations throughout continental Europe, Asia, Latin America, and Africa no longer feature concentrated family ownership and control.
c. Family ownership and control may provide better incentives for the firm to focus on long-run performance.
d. Such ownership may also minimize the conflict between owners and professional managers typically encountered in widely owned firms.
Q:
Those who are opposed to strong efforts toward CSR would use which of the following arguments?
a. Green taxes simply force firms to pay real costs that they otherwise place on others.
b. CSR externalizes an internality.
c. Tough environmental regulation leads to higher costs and reduced competitiveness.
d. Stringent environmental regulation will motivate firms to innovate.
Q:
The CSR debate centers on the question:
a. Why does the firm exist?
b. Why is resource management important?
c. What laws are needed to control the firms behavior?
d. What can be done to prevent unreasonable profits?
Q:
CSR tends to be the least concerned with improving:
a. Global sustainability.
b. Shareholder wealth maximization.
c. Rising levels of population.
d. Inequity.
Q:
Although framed in a domestic versus overseas context, the heart of this debate boils down to the foundational thorny point that frustrates CSR advocates: In a capitalist society, the shareholdersotherwise known as capitalistsare the ones who matter at the end of the day.
a. True
b. False
Q:
Choose one of the aspects of the comprehensive model of corporate governanceindustry-based, resource-based, or institution-based considerationsand how those factors influence the overall model.
Q:
Primary stakeholder groups are defined as those who influence or affect, or are influenced or affected by, the corporation, but they are not engaged in transactions with the corporation and are not essential for its survival.
a. True
b. False
Q:
Agency theory assumes that managers:
a. Have a responsibility to the owners.
b. Avoid opportunistic and self-serving activities.
c. Eliminate agency costs.
d. Can be left to their own devices.
Q:
An often-mentioned drawback of state owned enterprises is:
a. An ability to avoid bankruptcy and job loss.
b. Frequent conflict between ownership and management.
c. Little incentive to improve performance.
d. All of the above.
Q:
Outside of the Anglo-American world, most large firms:
a. Have a widely held ownership.
b. Insist on significant separation between ownership and control.
c. Are typically owned and controlled by families or the state.
d. None of the above.
Q:
Ownership will likely be diffused for:
a. A start-up firm.
b. Family-owned firms.
c. State-owned firms.
d. about three-quarters of U.S.-listed firms.
Q:
Recently, stewardship theory suggests that by and large managers can be viewed as stewards of owners interests.
a. True
b. False
Q:
The ability to successfully list a foreign firm on a high-profile exchange such as NYSE leads to a higher valuation for that firm as opposed to domestic firms.
a. True
b. False
Q:
FPI investors demand less protection.
a. True
b. False
Q:
Because of the market for corporate control, the long-term profitability of postmerger firms is impressively high.
a. True
b. False
Q:
Outside directors of a board are not always independent.
a. True
b. False
Q:
Evidence indicates that family ownership plays a positive role in the performance of large firms.
a. True
b. False
Q:
SOEs are an excellent way for firms to solve their incentive problems.
a. True
b. False
Q:
Founders usually start up firms and completely own and control these enterprises.
a. True
b. False
Q:
Firms pursuing a reactive CSR strategy actively participate in policy discussions, build alliances with stakeholder groups, and voluntarily go beyond what the regulations require.
a. True
b. False
Q:
Global sustainability is the number one goal of a firm.
a. True
b. False
Q:
What is the race to the bottom discussed in the text? Give an example that shows it is a real phenomenon, and another example that refutes MNEs contribution to the problem.
Q:
The participation of which of the following groups is essential in an accommodative strategy?
a. NGOs.
b. Managers.
c. Consumers.
d. Suppliers.
Q:
Global R&D has pros and cons for the firm that uses that approach. However, suppose you are the leader of the country where that firm is based. How might you view having R&D being conducted by a global team in a matter that is vital to the nations economic health/and or security?