CFIN -STUDENT EDITION-ACCESS >CUSTOM<
6th Edition
ISBN: 9780357752951
Author: BESLEY
Publisher: CENGAGE C
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Question
Chapter 1, Problem 15PROB
Summary Introduction
Ethics can be defined as moral philosophy or credo that differentiates right conduct from wrong.
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Explain the links between stock price, intrinsic value, and executive compensation
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Are poison-pill defenses ethical? If a potential acquirer buys company stock legally, thereby becoming a part owner of the company, should management be allowed to entrench itself against the wishes of this owner? Explain your answer.
Which of the following objectives of the company creates immoral practices such as: corrupt practice, unfair trade practice, etc.?
Select one:
A.
None of the given options
B.
Profit Maximization
C.
Welfare Maximization
D.
Wealth Maximization
Chapter 1 Solutions
CFIN -STUDENT EDITION-ACCESS >CUSTOM<
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- Consider again Milton Friedman’s article. 1. What does Friedman mean by “ethical custom”? 2. If the laws of the society are limiting the company’s profitability, would the company be within its rights to disobey the law? 3. What if the law is “on the books,” but the company could count on a lack of enforcement from state officials who were overworked and underpaid? Should the company limit its profits? Suppose that it could save money by discharging a pollutant into a nearby river, adversely affecting fish and, potentially, drinking water supplies for downstream municipalities. In polluting against laws that aren’t enforced, is it still acting “within the rules of the game”? What if almost all other companies in the industry were saving money by doing similar acts?arrow_forwardEthical Considerations. Are poison-pill defenses ethical? If a potential acquirer buys company stock legally,thereby becoming a part owner of the company, shouldmanagement be allowed to entrench itself against thewishes of this owner? Explain your answer.arrow_forwardWhy do accountants have to be ethical in their duties and responsibilities?arrow_forward
- What is the possible agency conflict between inside owner/managers and outside shareholders? What are some possible agency conflicts between borrowers and lenders? How is it possible for an employee stock option to be valuable even if the firm’s stock price fails to meet shareholders’ expectations?arrow_forwardWhy accountants are not afraid of subjectivity? Theoryarrow_forwardAfter dissolution caused by the illegal acts, fraud, corruption and etc. of the directors, trustees, officers, or employees, what will happen to the innocent stockholders and employees? Are they going to receive something from the company's assets since they are not involved to that act?arrow_forward
- 1. How is hiring the “next generation” of Chinese elites different from practices here in North America. Is it the same as Clinton’s daughter securing a job at a hedge fund company? 2. What are some of the moral principles involves here and what are some of the consequences of this practice? How does any company stay competitive if others choose to conduct unethical business practices?arrow_forwardAnalyze and discuss when earnings management may be an ethical practice and when it is an unethical practice.arrow_forwardQuestion: What are the different types of risks associated with businesses? Question: Why do businesses have to be proactive in their approach to risk? Question: What are some risks that the government causes for businesses? Question: What are some disadvantages of a sole proprietorship? Question: What is a SWOT analysis? Question: What type of business would benefit most from conducting a SWOT analysis? Question: Why would it be wise for some high-risk businesses to incorporate? Question: How might employees be a threat to businesses? Question: Why is it important to be aware of your competitors? Question: How can customers be a risk to business? Question: What is the role of the business owner concerning risk?arrow_forward
- If you are in financial hardship, explain what it means. If we suppose that financial hardship occurs, explain how and why financial distress would make a company's stock more hazardous.arrow_forwardWhich of the following nature of corporate governance damages the financial stability of the business? O a. It is structured ambiguously. Ob. It is compliant with the formal laws. Oc.it is adhering to the ethical standards. O d. It is adhering the best business practices.arrow_forwardExplain the Threat and Opportunity of Shareholder Activism ? Explain the Effect of Executive Compensation on the Cost of Equity? Why Corporate Governance Is Important to Investors?arrow_forward
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