Maximizing Shareholder Wealth and Fiduciary Duties Quiz

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18 Questions

What is the primary source of funding for a company, according to the text?

Sales of the company's goods

Which concept is described as the collection of procedures, customs, rules, laws, and institutions regulating how a corporation is managed?

Corporate Governance

What does a financial manager primarily track on a daily basis, according to the text?

Cash collections and disbursements

Which role involves recommending the best way to fund a project and overseeing its implementation?

Project Manager

What is the central theme in all conceptions of good governance, according to the text?

Risk Management and Mitigation

What is the primary responsibility of an accountant according to the text?

Presenting financial data

What is a reason management might prefer to reinvest profits instead of paying out dividends?

To secure job stability and future earnings for themselves

Why might executive directors and senior managers be considered risk averse in decision-making?

They are paid annual bonuses based on short-term results

What is a direct cost associated with corporate governance?

Remuneration and audit fees

Why might managers be more concerned with short-term results compared to shareholders?

Due to their annual bonus structure

What is a reason for retaining earnings instead of paying dividends?

To grow the business and reinvest profits

What is an indirect cost related to agency problems in corporate governance?

The cost of lost opportunities

What is the fiduciary duty for most corporations according to the text?

To maximize shareholder wealth at all costs

What is a Benefit corporation (B-Corp)?

A corporate form that expands directors' fiduciary responsibilities to include interests other than shareholders' interests

How do companies maximize their stock price according to the text?

By generating growth in sales through value creation for customers

What happens when companies successfully increase stock prices according to the text?

They grow and add more employees, benefiting society

What is the main focus for companies that aim to maximize their stock price according to the text?

Generating growth by creating value for customers

How do newly privatized companies tend to grow according to the text?

By focusing on stock price maximization

Test your knowledge on maximizing shareholder wealth, fiduciary duties, corporate social responsibility, and benefit corporations. Explore key concepts related to directors' responsibilities, ethical considerations, employee welfare, and community concerns.

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