Which of the Following Statements Is CORRECT

question 5

Multiple Choice

Which of the following statements is CORRECT?

• A) Compensating managers with stock options can do nothing to help eliminate potential conflicts between stockholders and managers.
• B) Restrictions can be included in credit agreements, but these restrictions can do nothing to protect bondholders from conflicts of interest between them and the firm's managers and stockholders.
• C) The threat of takeovers reduces conflict of interest problems, but only between bondholders and stockholders.
• D) Compensating managers with stock options can help reduce conflicts of interest between stockholders and managers, but if the options are all exercisable on a specific date in the near future, this can motivate managers to do something other than try to maximize the stock's intrinsic value.
• E) Conflicts would not exist if the Security and Exchange Commission were abolished.

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Definitions:

Changing Phase

The transitional stage in a process, organization, or system where changes are being implemented or are about to occur.

Refreezing Phase

The final stage in the change process where new behaviors are solidified into normal practice within an organization.

Participation And Involvement Strategy

Approaches that actively engage individuals in the decision-making or change processes to foster commitment and collaboration.

Employee Resistance

The opposition or pushback by employees against changes proposed by management, often due to fear of the unknown or loss of security.