Which of the Following Actions Would Be Most Likely to Reduce

question 60

Multiple Choice

Which of the following actions would be most likely to reduce potential conflicts of interest between stockholders and managers?

• A) Pay managers large cash salaries and give them no stock options.
• B) Change the corporation's formal documents to make it easier for outside investors to acquire a controlling interest in the firm through a hostile takeover.
• C) Beef up the restrictive covenants in the firm's debt agreements.
• D) Eliminate a requirement that members of the board of directors must hold a high percentage of their personal wealth in the firm's stock.
• E) For a firm that compensates managers with stock options,reduce the time before options are vested,i.e. ,the time before options can be exercised and the shares that are received can be sold.

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Definitions:

Trespass To Land

An unlawful intrusion onto property owned by another, leading to potential legal action by the property owner.

Intentional Tort

A category of torts that involves harm caused on purpose by one person to another, as opposed to accidental harm.

Defenses To Negligence

Legal arguments used to counter a negligence claim, such as contributory negligence, assumption of risk, or comparative negligence.

Contributory Negligence

Contributory negligence is a legal doctrine where if the plaintiff is found to be partly at fault for the accident or damage, they may be barred from receiving any compensation from the defendant.