Final Flashcards
(34 cards)
Competition in product and service markets will not reduce managerial slack across all corporate governance systems.
False, Will reduce
Teams with more women managed to earn lower collective IQs than teams with fewer women.
False, Higher
The CEO may influence the board’s decision by the way he/she presents the information.
T
Corporate governance theory, such as the principal-agent model, predicts that conflicts of interest result in value destruction or expropriation.
T
Corporate governance devices or mechanisms are arrangements that does not solve
conflicts of interest corporations may face.
False, does solve…
a lack of competition makes managers more likely to enjoy a ‘quiet life’ rather than engage in empire-building.
T
Competition has no effect on managerial actions.
False, has effect
There is some evidence that stock market prices are affected by seasonal affective
disorder (SAD).
T
Two examples of the focus on behavioural biases are the representative heuristic
and Gambler’s fallacy.
False, similarities biases
Employee representatives that work for the firm increase firm profitability via information sharing with the management.
T
By making managerial compensation sensitive to firm performance, managers
should have the right incentives to maximize
Shareholder value
Corporate social responsibility (CSR) is also sometimes referred to as
Environmental, Social and governance (ESG)
One possible way of aligning the interests of the managers with those of the
shareholders is;
Managerial Compensation
The type I agency problem is the classic agency problem between the:
Managers and Shareholders
Pay sensitivity to performance has been documented for a range of countries
However, other factors have also been shown to have an effect, e.g., ownership and
control, and;
Firm size
The existing empirical literature on the impact of competition suggests that high
levels of competition Force managers to work harder They may even be a substitute
for;
Corporate Governance
Our minds use rules of thumb also called;
Heuristics, algorithms, and mental models.
Mental accounting consists of most investors keeping two accounts in their brains,
one for the losses and one for;
The gains from their investments
(____________) consists of the fact that most investors tend to be very risk averse,
even when facing very small risks.
Loss Aversion
Limits to cognitive resources include limits to our intelligence, Our attention span
and:
Our memory
Gambler’s fallacy consists of mistakenly reading patterns into random events that
are clearly…?
Independent of each other.
People tend to conform to the beliefs and behaviours of others, this conformity
effect also depends on an individual’s country, including the country’s;
Culture, religion, and history.
The two main forms of self-deception are Overconfidence and;
Confirmatory bias
The (__________) consists of admiring an exceptional characteristic of an
individual and then widening this positive assessment to all the other characteristics of
this individual.
Hola effect
