Which of the Following Actions Would Be Likely to Encourage

question 37

Multiple Choice

Which of the following actions would be likely to encourage a firm's managers to make decisions that are in the best interests of shareholders?

• A) The percentage of executive compensation that comes in the form of cash is increased and the percentage coming from long-term stock options is reduced.
• B) The state legislature passes a law that makes it more difficult to successfully complete a hostile takeover.
• C) The percentage of the firm's stock that is held by institutional investors such as mutual funds,pension funds,and hedge funds rather than by small individual investors rises from 10% to 80%.
• D) The firm's founder,who is also president and chairman of the board,sells 90% of her shares.
• E) The firm's board of directors gives the firm's managers greater freedom to take whatever actions they think best without obtaining board approval.

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Definitions:

Negatively Free

A condition where freedom is defined by the absence of external constraints or limitations on one's actions, as opposed to being enabled to pursue certain goals (positive freedom).

Kant

Immanuel Kant was an 18th-century German philosopher who made significant contributions to metaphysics, epistemology, ethics, and aesthetics, notably known for his work "Critique of Pure Reason."

Acting Freely

Engaging in actions willingly and autonomously, making choices that are not coerced or predetermined by external forces.

Freedom of Personal Choice

Refers to an individual's right and ability to make decisions for themselves without undue interference from external entities.