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:

Mentally Ill Chemical Abusers

Individuals who suffer from both mental health disorders and substance abuse issues, requiring integrated treatment approaches.

Homeless

The state of having no permanent residence, often resulting in living in shelters, on the streets, or in inadequate housing.

Overdiagnosed

The phenomenon where individuals are diagnosed with a condition or disease more often than is factual or warranted, potentially leading to unnecessary treatment or intervention.

Mentally Ill Chemical Abusers

Individuals who suffer from both a serious mental illness and a substance abuse disorder, requiring integrated treatment for both conditions.