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:

8 Years Old

An age or stage in human development generally associated with early elementary school years, characterized by rapid learning, socialization, and cognitive growth.

Keeping Secrets

The act of not disclosing information to others that is intended to be private or confidential.

Culture

The complex set of knowledge, beliefs, values, norms, and customs shared by a group of people, influenced by history, geography, religion, and social practices.

Nuclear Family Environment

Refers to a household consisting only of parents and their children, which is often considered the traditional family structure.