Which of the Following Statements Is False

question 38

Multiple Choice

Which of the following statements is false?

• A) The incentives come from owning stock in the company and from compensation that is sensitive to performance.
• B) The role of the corporate governance system is to mitigate the conflict of interest that results from the combination of ownership and control without unduly burdening managers with the risk of the firm.
• C) Punishment comes when a board fires a manager for poor performance or fraud, or when, upon failure of the board to act, shareholders or raiders launch control contests to replace the board and management.
• D) The corporate governance system attempts to align interests by providing incentives for taking the right action and punishments for taking the wrong action.

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Definitions:

Direct Labor Cost

The total cost of all labor directly involved in the production of goods or services, excluding indirect labor costs.

Labor Cost

The total expenses associated with employing labor, including wages, benefits, and taxes.

Cash Budget

A financial plan that estimates cash inflows and outflows over a certain period of time, often used for managing liquidity.

Cash Receipts

are documents or records of the actual cash received by a business from transactions, including sales, loans, or asset disposals.