One Means That Is Considered to Improve the Effectiveness of Outside

question 78

Multiple Choice

One means that is considered to improve the effectiveness of outside directors is:

• A) mandating that all outside directors be drawn from government or academia rather than industry.
• B) requiring that outside directors be former executives of the firm.
• C) requiring outside directors to own significant equity stakes in the firm.
• D) requiring that outside directors act objectively and have no ownership interest in the firm.

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Definitions:

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments, included in a company's cash flow statement.

Statement of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents.

Common Stock

Equity ownership in a corporation, giving shareholders voting rights and a share in the company's profits, usually through dividends.

Financing Activities

Transactions and events where cash is raised for the business through borrowing or issuing equity, reflected in the cash flow statement.