Which of the Following Statements Is FALSE

question 26

Multiple Choice

Which of the following statements is FALSE?

• A)An active takeover market is part of the system through which the threat of dismissal is maintained.
• B)When internal governance systems such as ownership,compensation,board oversight,and shareholder activism fail,the one remaining way to remove poorly performing managers is by mounting a hostile takeover.
• C)Because hostile takeovers and internal governance systems are substitute mechanisms,researchers have found that boards are less likely to fire managers for poor performance during active takeover markets than they are during lulls in takeover activity.
• D)The effectiveness of the corporate governance structure of a firm depends on how well protected its managers are from removal in a hostile takeover.

---

Definitions:

Period Costs

Costs that are taken directly to the income statement as expenses in the period in which they are incurred or accrued.

Inventory Accounts

Accounts used to track the cost of inventory that has been purchased but not yet sold to customers.

Manufacturing Company

A business that produces finished goods from raw materials by using various forms of labor, equipment, and processes.

Merchandising Company

A business that purchases finished goods for resale, making a profit on the difference between the buying and selling prices.