Which of the Following Statements Is False

question 44

Multiple Choice

Which of the following statements is false?

• A) A board is said to be classified when its monitoring duties have been compromised by connections or perceived loyalties to management.
• B) Even the most active independent directors spend only one or two days per month on firm business, and many independent directors sit on multiple boards, further dividing their attention.
• C) On a board composed of insider, gray, and independent directors, the role of the independent director is really that of a watchdog.
• D) Because independent directors' personal wealth is likely to be less sensitive to performance than that of insider and gray directors, they have less incentive to closely monitor the firm.

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Definitions:

Non-controlling Interest Proportion

The share of equity interest in a subsidiary not owned by the parent company, expressed as a percentage of total equity.

Equity Balance

The amount of owners' equity in a company, reflecting the residual interest in the assets of the entity after deducting liabilities.

Dividend Payment Capacity

The ability of a company to make dividend payments to its shareholders, often assessed by its free cash flow or earnings.

Non-controlling Interest

A minority share of ownership in a subsidiary that is not owned by the parent company, reflected in consolidated financial statements to show the portion of the subsidiary's earnings not attributed to the parent.