【正文】 Goals and Governance of the Corporation 112 169。 2020 by McGrawHill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. c. A salary that is paid partly in the form of the pany’s shares means that the manager earns the most when the shareholders’ wealth is maximized. This is therefore most likely to align the interests of managers and shareholders. Est time: 06–10 29. Even if a shareholder could monitor and improve managers’ performance, and thereby increase the value of the firm, the payoff would be small, since the ownership share in a large corporation is very small. For example, if you own $10,000 of Ford Motor stock and can increase the value of the firm by 5%, a very ambitious goal, you benefit by only: ? $10,000 = $500. In contrast, a bank that has a multimilliondollar loan outstanding to the firm has a large stake in making sure that the loan can be repaid. It is clearly worthwhile for the bank to spend considerable resources on monitoring the firm. Est time: 01–05 30. Clear and prehensive financial reports provide essential information to the numerous shareholders of large corporations, allowing the shareholders to monitor the performance of the corporation and its board of directors and management. The debacles at WorldCom and Enron were directly related to a lack of clear and prehensive financial reports. Est time: 01–05 31. While the answer to this question is largely a matter of opinion, and there are significant numbers of ―mentators‖ on each side of the issue, the perspective of the authors is that failures of corporate governance are a matter of a few ―bad apples‖ rather than a symptom of systematic failure. The mechanisms discussed in the text (such as takeovers, pensation plans, and legal and regulatory requirements) for ameliorating agency problems generally contribute to effective corporate governance. On the other hand, mentators on both sides of the issue would likely wele improvements in these mechanisms. Est time: 06–10 32. Longterm relationships can encourage ethical behavior. If you know that you will engage in business with another party on a repeated basis, you will be less likely to take advantage of your business partner if an opportunity to do so arises. When people say What goes around es around, they recognize that the way they deal with their associates will influence the way their associates treat them. When relationships are shortlived, however, the temptation to be unfair is greater since they provide less reason to fear reprisal and less opportunity for fair dealing to be reciprocated. Chapter 01 Goals and Governance of the Corporation 110 169。 often these corporations can obtain debt financing only if the shareholders provide these personal guarantees. Est time: 01–05 18. The stock price reflects the value of both current and future dividends that the shareholders expect to receive. In contrast, profits reflect performance in the current year only. Profit maximizers may try to improve this year’s profits at the expense of future profits. But stockprice maximizers will take account of the entire stream of cash flows that the firm can generate. They are more apt to be forwardlooking. Est time: 01–05 19. In this situation, a ―superior‖ rate of return is a rate greater than the rate of return investors could earn elsewhere in the financial markets from alternative investments with risk equal to that of the ―lowrisk capital investment‖ described in the problem. Fritz (who is riskaverse) will applaud the investment because he can maintain the risk level he prefers while earning a superior return. Frieda (who is risktolerant) will applaud the investment because investors will be willing to pay more for the shares Frieda owns than they would have paid if the firm had not made this lowrisk capital investment. Frieda would be likely to sell her shares to a more riskaverse investor and use the proceeds of her sale to invest in shares of a pany with a very high rate of return and mensurate high level of risk. Est time: 01–05 20. a. This action might appear, superficially, to be a grant to former employees and thus not consistent with value maximization. However, such ―benevolent‖ actions might enhance the firm’s reputation as a good place to work, might result in greater loyalty on the part of current employees, and might contribute to the firm’s recruiting efforts. Therefore, from a broader perspective, the action may be valuemaximizing. Chapter 01 Goals and Governance of the Corporation 16 169。 2020 by McGrawHill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 9. A corporation might cut its labor force dramatically, which could reduce immediate expenses and increase profits in the short term. Over the long term, however, the firm might not be able to serve its customers properly, or it might alienate its remaining workers。Chapter 01 Goals and Governance of the Corporation 11 169。 the stockholders’ liability for the debts of the corporation is limited to the investment each stockholder has made in the shares of the corporation. Est time: 01–05 5. Double taxation means that a corporation’s ine is taxed first at the corporate tax rate, and then, when the ine is distributed to shareholders as dividends, the ine is taxed again at each shareholder’s personal tax rate. Est time: 01–05 6. a