Which of the Following Statements Is FALSE

question 7

Multiple Choice

Which of the following statements is FALSE?

• A)Controlling shareholders pay for their control rights because the firm effectively faces a higher cost of equity for outside capital.
• B)Most countries follow what is called the stakeholder model,giving explicit consideration to other stakeholders-in particular,rank-and-file employees.
• C)In a pyramid structure,a family first creates a company in which it owns more than 50% of the shares and therefore has a controlling interest.
• D)A conflict of interest arises because the family has an incentive to try to move profits (and hence dividends)down the pyramid-that is,toward companies in which it has few cash flow rights and away from firms in which it has more cash flow rights.

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Definitions:

Governmental Laws

Statutes and regulations enacted by legislative bodies that govern the actions and behavior of citizens and organizations.

Local Economic Conditions

The state of the economy in a specific geographic area, including factors like employment rates, industrial output, and consumer spending.

Change Leadership

The ability to influence and inspire action in others towards achieving organizational transformations and adapting to new challenges.

Status Quo Management

A management approach focused on maintaining existing conditions and avoiding change.