Principles of Managerial Finance (14th Edition) (Pearson Series in Finance)
14th Edition
ISBN: 9780133507690
Author: Lawrence J. Gitman, Chad J. Zutter
Publisher: PEARSON
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Chapter 19, Problem 19.6P
ETHICS PROBLEM Is there a conflict between maximizing shareholder wealth and never paying bribes when doing business abroad? If so, how might you explain the firm’s position to shareholders who are asking why the company does not pay bribes when its foreign competitors in various nations clearly do so?
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Providing safeguards against corruption and incompetence, removing conflict of interest, and improving perceptions of legitimacy are the arguments for:
A.
combining the roles of CEO and chairman of the board of directors
B.
separating the roles of CEO and chairman of the board of directors
C.
implementing outsourcing and offshoring to enter a foreign market
D.
implementing joint ventures and subsidiaries to enter a foreign market.
1. Is payment of bribes an unacceptable business practice within the U.S.? Justify youranswer with supporting evidence.
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?
Chapter 19 Solutions
Principles of Managerial Finance (14th Edition) (Pearson Series in Finance)
Ch. 19.1 - Prob. 19.1RQCh. 19.1 - Prob. 19.2RQCh. 19.1 - Prob. 19.3RQCh. 19.1 - Prob. 19.4RQCh. 19.2 - Under FASB No. 52, what are the translation rules...Ch. 19.3 - Prob. 19.6RQCh. 19.3 - Explain how differing inflation rates between two...Ch. 19.3 - Discuss macro and micro political risk. What is...Ch. 19.3 - Prob. 1FOECh. 19.4 - Prob. 1GF
Ch. 19.4 - Prob. 19.9RQCh. 19.4 - Prob. 19.10RQCh. 19.4 - Prob. 19.11RQCh. 19.4 - Prob. 19.12RQCh. 19.5 - Prob. 19.13RQCh. 19.5 - Prob. 19.14RQCh. 19.5 - Prob. 19.15RQCh. 19.6 - Prob. 19.16RQCh. 19 - Prob. 1ORCh. 19 - Prob. 19.1WUECh. 19 - Prob. 19.2WUECh. 19 - Prob. 19.3WUECh. 19 - Prob. 19.4WUECh. 19 - Prob. 19.5WUECh. 19 - Prob. 19.1PCh. 19 - Prob. 19.2PCh. 19 - Prob. 19.3PCh. 19 - ETHICS PROBLEM Is there a conflict between...
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- Good corporate citizenship ________. A. Is expensive to implement and does not guarantee returns B. must have managements sincere convictions behind it in order to succeed C. Is more relevant in countries with less regulation. D. makes good business sensearrow_forwardSome accountants argue that they should be allowed to invest in a company's stock as long as they themselves aren't involved in working on the company's audit or consulting. What do you think of this idea?arrow_forwardWhich of the following statements is CORRECT? a. Most business in the U.S. is conducted by corporations, and corporations' popularity results primarily from their favorable tax treatment. b. Corporations and partnerships have an advantage over proprietorships because a proprietor is exposed to unlimited liability, but the liability of all investors in the other types of businesses is more limited. c. Conflicts can exist between stockholders and managers, but potential conflicts are reduced by the possibility of hostile takeovers. d. A good goal for a firm's management is the maximization of expected EPS. e. For a stock to be in equilibrium, its intrinsic value must be greater than the actual market price.arrow_forward
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