Which of the Following Statements About Governance Mechanisms Is Misleading

question 36

Multiple Choice

Which of the following statements about governance mechanisms is misleading? 

• A) Governance mechanisms can be classified as voice-based and exit-based mechanisms. 
• B) As an external governance mechanism, private equity utilizes the stock market to discipline managers. 
• C) In general, boards are likely to use "carrots" before considering "sticks." 
• D) Product market competition complements the market for corporate control and the market for private equity.

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Definitions:

Capital Contributions

Value or assets provided to a company by its owners or shareholders to support the business and its operations.

Income Distribution

The process of dividing and allocating income earned by a business to its stakeholders or investment products.

Personal Use

Personal use refers to the use of an asset or service for individual rather than business or commercial purposes.

Interest Attributed

The portion of interest income or expense assigned to a specific entity, often used in the context of loans or investments.