Which of the Following Statements Is False

question 28

Multiple Choice

Which of the following statements is false?

• A) The conflict of interest between managers and investors derives from the separation of ownership and control in a corporation.
• B) Any discussion of corporate controls-the system of controls, regulations, and incentives designed to prevent fraud-is a story of conflicts of interest and attempts to maximize them.
• C) Once control and ownership are separated a conflict of interest arises between the owners and the people in control of a corporation.
• D) The separation of ownership and control is perhaps the most important reason for the success of the corporate organizational form. Because any investor can hold an ownership stake in a corporation, investors are able to diversify and thus, with no costs, reduce their risk exposures.

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Definitions:

Split Profit

A financial arrangement where profits are divided among stakeholders or partners according to a predetermined formula or agreement.

Wage Freezes

policies or agreements that temporarily halt increases in employee wages, often implemented during economic downturns or as part of cost-saving measures.

Industrial Relations School

A field of study that examines employment relationships, including the interactions between employers, employees, and the regulations and policies affecting work environments.

Competitive Forces

The pressures that firms in the same industry face from competitors, which influence their strategies and market positioning.