Which of the Following Statements Regarding Stakeholder Theory Is Incorrect

question 18

Multiple Choice

Which of the following statements regarding stakeholder theory is incorrect?

• A)it dispenses with the assumption that the sole important relationship is between agents (managers)and principals (shareholders)
• B)it considers the corporation from a much broader perspective,whereby shareholders are only one of many potential stakeholder groups
• C)to ignore society is to threaten the equilibrium that it provides
• D)it assumes that the sole important relationship is between agents (managers)and principals (shareholders)

---

Definitions:

Corporate Governance

The system of rules, practices, and processes by which a company is directed and controlled, focusing on the relationships among the management, board of directors, shareholders, and other stakeholders.

Double Taxation

A taxation principle where income is taxed at both the corporate level and again at the individual level on dividends received.

Partnership Agreement

A formal arrangement between two or more parties to manage and operate a business and share its profits or losses in accordance with the terms set out in the agreement.

Bylaws

Internal rules adopted by an organization or corporation to govern its actions and decisions.