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TakeHomeFinalExam.docxThe final exam consists of 6 of the following 8 questions as indicated below. Each question should be answered in complete sentences with one page maximum typed – single or double-spaced – for each question.
Please note that spelling, grammar and complete sentences will be considered for grading purposes.
You are free to use any resources appropriate including class presentations, reading materials and internet sources, however you should not simply search for an answer or copy from any sources without proper attribution. Citing references from the reading materials to support your answers to questions below is not always necessary but is always a smart idea if relevant.
Questions –
NOTE YOU SHOULD ONLY ANSWER 6 OF THE FOLLOWING 8 QUESTIONS:
1. Some have theorized that the primary goal of a corporation should be to maximize stockholder value. Define this goal and provide 2 arguments for and 2 arguments against why maximizing the returns to stockholders of the corporation should be the primary goal for management of the corporation.
2. Others have theorized that corporations should adhere to a broader set of goals maximizing the interests of multiple stakeholders beyond just the stockholder. Define this goal and provide 2 arguments for and 2 arguments against why such a theory makes sense.
3. Modern corporate governance regulations have focused on providing specific requirements on corporate activity regarding disclosure, independence, management supervision and other areas. Describe 4 areas where regulations have been put in place to encourage or enforce good corporate governance and provide commentary on whether they have been successful and how can they be improved.
4. Financial markets and market efficiency have been cited as tools for enforcing proper corporate governance actions by a company. Describe the efficient market theory and its relationship to corporate governance. Some have speculated that mergers and acquisitions are a response by an efficient financial market to continue to regulate and manage corporations effectively. Describe a significant material corporate transaction in the news over the past 10 years and comment on whether this action was in the best interest of stockholders or other stakeholders of parties to the transaction.
5. Describe the primary components of management compensation. Some analysts have speculated that a solution to agency theory problems has been to link a large component of management compensation to equity-based compensation. Describe agency theory as it relates to problems with management compensation, and comment on whether linking management compensation to share performance has been successful in solving these problems.
6. Describe the best practices of a modern board of directors with respcte to corporate governance. Include a description of
a. who they represent (both who they should represent in theory and who they actually represent in practice)
b. how they should manage the management team overall and a crisis in particular, and
c. whether modern regulations (involving independence of directors, board qualifications ad audit committees in particular) have improved corporate governance practices.
7. Some analysts have speculated that the financialization of the American economy has resulted in economic costs being imposed on the rest of the public by the financial sector. Describe what the term financialization refers to. Comment on what the impact of financialization has been. Please include references to at least 2 separate points from the readings supporting your points and 2 separate examples from the real world either agreeing with or disputing this speculation on economic costs of financialization.
