LSUS MBA 705 Chapter 5 Complete Solution

LSUS MBA 705 Chapter 5 Complete Solution Adverse Selection ️The inability of shareholders to identify the precise competencies and personal attributes of top managers when they are hired. Agency Problem: ️A situation in which a firms' top managers (i.e., the "agents" of the firms' owners) do not act in the best interests of the shareholders. Diversification: ️The process of acquiring companies to increase a firm's size. Employee Stock Ownership Plans (ESOPs): ️Formal programs that transfer shares of stock to a company's employees. Ethical Relativism: ️The idea that ethics is based on accepted norms in a culture, meaning that what is ethical in one nation or culture might be unethical in another. Goals: ️Desired general ends toward which efforts are directed Integrative Social Contracts View of Ethics: ️Perspective suggesting that decisions should be based on existing norms of behavior, including cultural, community, or industry factors. Justice View of Ethics: ️Perspective suggesting that all decisions will be made in accordance with established rules or guidelines. Leveraged Buyout (LBO): ️A takeover in which the acquiring party borrows funds to purchase a firm. Managerial Ethics: ️An individual's responsibility to make business decisions that are legal, honest, moral, and fair. Moral Hazard: ️When parties in an arrangement do not share equally in the risks and benefits. Objectives: ️Specific, verifiable, and often quantified versions of a goal. Objectivism: ️A philosophical perspective, espoused by Ayn Rand, that emphasizes an objective reality understood by logic and reason and focuses on individual freedom and property rights. Offshoring: ️Relocating some or all of a firm's manufacturing or other business processes to another country typically to reduce costs. Religious View of Ethics: ️Perspective that evaluates organizational decisions on the basis of personal or religious convictions. Rights View of Ethics: ️Perspective that evaluates organizational decisions on the extent to which they protect individual rights. Self-Interest View of Ethics: ️Perspective suggesting the benefits of the decision maker should be the primary consideration when weighing a decision. Social Responsibility: ️The expectation that business firms should serve both society and the financial interests of shareholders. Stakeholders ️Groups or individuals who are affected by or can influence an organization's