Question Details

Franchising is the process by which national governments sell state owned operations 



1. The agency costs of an MNC are likely to be lower if it:
A) Scatters its subsidiaries across many foreign countries.
B) Increases its volume of international business.
C) Uses a centralized management style.
D)Scatters its subsidiaries across many foreign countries and increases its volume of international business.

2. An MNC may be more exposed to agency problems if most of its shares are held by:
A) A few mutual funds.
B) A widely dispersed set of individual investors.
C) A few pension funds.
D) All of these would prevent agency problems.

3. The Sarbanes-Oxley Act improves corporate governance of MNCs because it:
A) Makes executives more accountable for verifying financial statements.
B) Eliminates stock options as a form of compensation.
C) Ties executive compensation to firm performance.
D) Places a limit on the amount of funds that managers can spend.

4. MNCs can improve their internal control process by all of the following except:
A) Establishing a centralized data base of information.
B) Ensuring that all data are reported consistently among subsidiaries.
C) Ensuring that the MNC always borrows from countries where interest rates are lowest.
D) Using a system that checks internal data for unusual discrepancies.

5.Franchising is the process by which national governments sell state owned operations to corporations and other investors.
A) True.
B) False.



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