The Purpose of Governance Mechanisms in Corporations Is To

question 2

Multiple Choice

The purpose of governance mechanisms in corporations is to:

• A)centralize company resources to the top management.
• B)reduce the scope and frequency of the agency problems.
• C)satisfy the requirements of the Securities and Exchange Commission (SEC).
• D)limit corporate growth to manageable rates.
• E)monitor the performance of the board of directors.

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Definitions:

Depreciation Expense

The allocation of the cost of an asset over its useful life, reflecting the decrease in value of the asset over time due to usage, wear and tear, or obsolescence.

Telephone System

A communication network designed for the purpose of transmitting voice over distances.

Useful Life

The estimated duration an asset is expected to be functional and valuable for, used for depreciation calculations.

Salvage Value

The predicted resale value of an asset at the close of its effective life.