Gamma Corp

question 35

Multiple Choice

Gamma Corp.has recently bought stocks in an under performing company that has failed to maximize stockholder wealth.Gamma Corp.has made changes to the top management structure of the company and has persuaded the management to pursue strategies that maximize the wealth of stockholders.Gamma Corp.has been able to earn millions by doing so.Which of the following concepts is illustrated in this scenario?

• A)Greenmail
• B)Agency theory
• C)Information asymmetry
• D)Self-dealing
• E)On-the-job consumption

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Definitions:

Directors

Members of a company's board responsible for making major policy and financial decisions, acting collectively in the best interests of the company and its shareholders.

Shareholders

Individuals or entities that own one or more shares of stock in a corporation, giving them ownership interests.

Articles Of Incorporation

A document that must be filed with a secretary of state to create a corporation. Usually, it includes the basic rights and responsibilities of the corporation and the shareholders.

Criminal Guilt

A legal status that results when an individual is found responsible for committing a crime, beyond a reasonable doubt.