Fundamentals of Cost Accounting
6th Edition
ISBN: 9781260708783
Author: LANEN, William
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 12, Problem 24CADQ
To determine
Define the reasons behind the high pay to the executives of the companies even if the company incurs the loss.
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Students have asked these similar questions
On November 14, Thorogood Enterprises announced that the public and acrimonious battle with its current CEO had been resolved.
Under the terms of the deal, the CEO would step down from his position immediately. In exchange, he was given a generous
severance package. Given the information below, calculate the cumulative abnormal return (CAR) around this announcement. Assume
the company has an expected return equal to the market return.
Note: A negative velue should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do
not round intermediate calculetions. Round your answers to 1 decimal place.
Market Return
Date
November 7
(K)
Company
Return (%)
1.3
0.9
November
1.1
0.9
November 9
-1.0
-0.4
November 10
-4.6
-0.6
November 11
2.1
1.0
November 14
4.3
2.6
November 15 0.1
0.1
November 16
1.5
November 17
0.4
November 18
November 21
-1.0
0.0
0.2
Days from
nouncement
7
2
3
Dailly Abnormal
Return
Cumulative Abnormal
Return
On November 14, Thorogood Enterprises announced that the public and acrimonious battle with its current CEO had been resolved.
Under the terms of the deal, the CEO would step down from his position immediately. In exchange, he was given a generous
severance package. Given the information below, calculate the cumulative abnormal return (CAR) around this announcement. Assume
the company has an expected return equal to the market return.
Note: A negative value should be indicated by a minus sign. Leave no cells blank - be certain to enter "O" wherever required. Do
not round intermediate calculations. Round your answers to 1 decimal place.
Market
Return (%) Return (%)
Company
Date
November 7
0.8
0.4
November 8
0.6
0.4
November 9
-0.5
-0.3
November 10
-0.6
-0.5
November 11
1.6
1.0
November 14
-0.4
2.1
November 15
0.1
0.1
November 16
0.9
1.0
November 17
0.5
0.6
November 18
-0.5
0.0
November 21
0.6
0.2
Days from
Announcement
-5
-4
-3
-2
-1
0
1
2
3
4
5
Daily Abnormal
Return
Cumulative Abnormal…
On November 14, Thorogood Enterprises announced that the public and acrimonious battle with its current CEO had been resolved.
Under the terms of the deal, the CEO would step down from his position immediately. In exchange, he was given a generous
severance package. Given the information below, calculate the cumulative abnormal return (CAR) around this announcement. Assume
the company has an expected return equal to the market return.
Note: A negative value should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do
not round intermediate calculations. Round your answers to 1 decimal place.
Market Return
(%)
Company
Return (%)
Date
November 7
1.3
0.9
November 8
1.1
0.9
November 9
-1.0
-0.4
November 10
-0.6
-0.6
November 11
2.1
1.0
November 14
-0.9
2.6
November 15
0.1
0.1
November 16
0.9
1.5
November 17
1.0
0.4
November 18
-1.0
0.0
November 21
1.1
0.2
Days from
Announcement
Daily Abnormal
Cumulative Abnormal
Return
Return
-5
-0.4
-0.4
-4…
Chapter 12 Solutions
Fundamentals of Cost Accounting
Ch. 12 - What does decentralization mean in the context of...Ch. 12 - Why is performance measurement an important...Ch. 12 - Prob. 3RQCh. 12 - What does dysfunctional decision making refer to?Ch. 12 - Prob. 5RQCh. 12 - What are the five basic kinds of decentralized...Ch. 12 - What is goal congruence? How is it different from...Ch. 12 - Prob. 8RQCh. 12 - What is relative performance evaluation?Ch. 12 - Prob. 10RQ
Ch. 12 - Prob. 11RQCh. 12 - Prob. 12RQCh. 12 - The management control system collects information...Ch. 12 - Salespeople are often paid a commission based on...Ch. 12 - Prob. 15CADQCh. 12 - Prob. 16CADQCh. 12 - On December 30, a manager determines that income...Ch. 12 - Prob. 18CADQCh. 12 - Prob. 19CADQCh. 12 - The manager of an operating department just...Ch. 12 - In the previous chapters, we considered different...Ch. 12 - A company has a bonus plan that states that...Ch. 12 - Prob. 23CADQCh. 12 - Prob. 24CADQCh. 12 - Prob. 25CADQCh. 12 - Prob. 26CADQCh. 12 - Prob. 27CADQCh. 12 - Prob. 28CADQCh. 12 - Prob. 29ECh. 12 - Evaluating Management Control SystemsEthical...Ch. 12 - Prob. 31ECh. 12 - Management Control Systems and Incentives A...Ch. 12 - Prob. 33ECh. 12 - Prob. 34ECh. 12 - Prob. 35ECh. 12 - Alternative Allocation Bases: Service Bartolo...Ch. 12 - Prob. 37ECh. 12 - Single versus Dual Rates: Ethical Considerations A...Ch. 12 - Single versus Dual Rates
Using the data for the...Ch. 12 - Alternative Allocation Bases Thompson Aeronautics...Ch. 12 - Tone at the Top, Ethics Once upon a time, a major...Ch. 12 - Prob. 42ECh. 12 - Prob. 43ECh. 12 - Internal Controls Commonly in many organizations,...Ch. 12 - Evaluating Management Control Systems SPG Company...Ch. 12 - Analyze Performance Report for Decentralized...Ch. 12 - Divisional Performance Measurement: Behavioral...Ch. 12 - Prob. 48PCh. 12 - Prob. 49PCh. 12 - Cost Allocations: Comparison of Dual and Single...Ch. 12 - Cost Allocation for Travel Reimbursement Your...Ch. 12 - Incentives, Illegal Activities, and Ethics An...
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