1|Page
IBUS 401 exam 1 Questions and Correct
Answers/ Latest Update / Already
Graded
Common finance decisions include:
Ans: Whether to discontinue, pursue, expand, business in certain country
or how to finance expansion
Finance decisions are influenced by:
Ans: Marketing, management, accounting and information systems
Agency problem
Ans: The conflict of goals between managers and shareholders
Agency costs
Ans: Cost of ensuring that managers maximize shareholder wealth
Why are costs higher for mnc compared to domestic
, 2|Page
Ans: Monitoring managers of distant subsidiaries in foreign countries is
more difficult, foreign subsidiary managers raised in different cultures may
not follow uniform goals, and sheer size of large Mncs can create large
agency problems
Parent control of agency problems
Ans: Parent should clearly communicate the goals for each subsidiary to
ensure managers focus on maximizing the value of the subsidiary
Corporate control of agency problems
Ans: Entire management of the mnc must be focused on maximizing
shareholder wealth
Sarbanes oxley act
Ans: Ensures a more transparent process for managers to report on the
productivity and financial condition of there firm
How SOX Improved Corporate Governance of MNCs
IBUS 401 exam 1 Questions and Correct
Answers/ Latest Update / Already
Graded
Common finance decisions include:
Ans: Whether to discontinue, pursue, expand, business in certain country
or how to finance expansion
Finance decisions are influenced by:
Ans: Marketing, management, accounting and information systems
Agency problem
Ans: The conflict of goals between managers and shareholders
Agency costs
Ans: Cost of ensuring that managers maximize shareholder wealth
Why are costs higher for mnc compared to domestic
, 2|Page
Ans: Monitoring managers of distant subsidiaries in foreign countries is
more difficult, foreign subsidiary managers raised in different cultures may
not follow uniform goals, and sheer size of large Mncs can create large
agency problems
Parent control of agency problems
Ans: Parent should clearly communicate the goals for each subsidiary to
ensure managers focus on maximizing the value of the subsidiary
Corporate control of agency problems
Ans: Entire management of the mnc must be focused on maximizing
shareholder wealth
Sarbanes oxley act
Ans: Ensures a more transparent process for managers to report on the
productivity and financial condition of there firm
How SOX Improved Corporate Governance of MNCs
