Which of the Following Statements Is False

question 40

Multiple Choice

Which of the following statements is false?

• A) The shareholders as a group elect a board of directors to monitor managers. The directors themselves, however, have the same conflict of interest-monitoring is costly and in many cases directors do not get significantly greater benefits than other shareholders from monitoring the managers closely.
• B) In principle, the board of directors hires the executive team, sets its compensation, approves major investments and acquisitions, and dismisses executives if necessary.
• C) In the United States, the board of directors has a clear fiduciary duty to protect the interests of both the owners of the firm (the shareholders) and the interests of other stakeholders in the firm (such as the employees).
• D) When the ownership of a corporation is widely held, no one shareholder has an incentive to bear the cost of monitoring, because she bears the full cost of monitoring but the benefit is divided among all shareholders.

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Definitions:

Personal Achievement

Refers to the accomplishment of personal goals and objectives, often leading to a sense of satisfaction and fulfillment.

Competition

The rivalry between businesses or individuals for resources, market share, or superiority in a particular field.

Power Avoidance

A cultural value indicating a society's tolerance for unequal distribution of power, and its members' behavioral response to minimize or avoid such inequalities.

Ambiguity

Ambiguity is the quality of being open to more than one interpretation, lacking clarity, and leading to uncertainty or confusion.