Which of the Following Statements About Corporate Governance Is True

question 8

Multiple Choice

Which of the following statements about corporate governance is true?

• A)There is a greater need for government regulation in the case of young, upstart companies than there is for mature, well-established firms.
• B)The corporate charter is the most effective control mechanism because management is bound by it.
• C)A nation's economic competitiveness is dependent on good corporate governance.
• D)Society can rely on the free market to ensure that firms have strong corporate control mechanisms in place; government regulation is unnecessary.

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Definitions:

Shares Outstanding

The total number of shares of a corporation's stock that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

Treasury Stock

Shares that were once outstanding and have been reacquired by the corporation, reducing the amount of outstanding stock on the open market.

Paid-In Capital

Funds that are received by a company from investors in exchange for stock, representing the capital provided by shareholders as a part of the equity of the company.

Cash Dividends

Payments made out of a corporation's earnings to its shareholders in the form of cash.