Which of the Following Statements Is FALSE

question 49

Multiple Choice

Which of the following statements is FALSE?

• A)When a firm faces financial distress,shareholders have an incentive not to invest and to withdraw money from the firm if possible.
• B)Because top managers often hold shares in the firm and are hired and retained with the approval of the board of directors,which itself is elected by shareholders,managers will generally make decisions that increase the value of the firm's equity.
• C)An over-investment problem occurs when shareholders have an incentive to invest in risky positive-NPV projects.
• D)A negative-NPV project destroys value for the firm overall.

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Definitions:

Private Companies

Companies that do not have publicly traded shares and are typically owned by a small group of investors, often including the founders and family members.

User Groups

Communities or forums where users of a specific product or service share information and feedback.

Financial Statements

Reports that provide detailed information about a company's financial performance and position, typically including the balance sheet, income statement, and cash flow statement.

International Financial Reporting Standards

A set of global accounting principles that guide how financial statements are prepared and presented, aiming to bring consistency to financial reporting around the world.