Which of the Following Statements Is True

question 38

Multiple Choice

Which of the following statements is true?

• A)Shareholders as a group have little or no ability to force managers to pursue maximization of the firm's value.
• B)The effectiveness of a board of directors in monitoring managers is enhanced by appointing members from the firm who are well-informed about the management problems facing the firm.
• C)Reducing the amount of debt financing can reduce divergence between the shareholders' interests and the manager's interests.
• D)Equity ownership by managers is thought to be one of the most effective corporate control mechanisms.
• E)All of the above are true.

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Definitions:

Adequate Cash Flow

The level of cash inflow that is sufficient to cover the outflow necessities for a business to operate smoothly and meet its financial obligations.

Home Based

Pertaining to businesses or activities that are operated out of a person's residence, rather than from an external office or commercial establishment.

Small Business Administration

A U.S. government agency designed to support and assist small businesses through funding, training, and advisory services.

Number of Employees

The number of employees refers to the total count of individuals working for an organization, which can indicate the size and scope of the business.