Which of the Following Statements Is False

question 22

Multiple Choice

Which of the following statements is false?

• A) An active takeover market is part of the system through which the threat of dismissal is maintained.
• B) When internal governance systems such as ownership, compensation, board oversight, and shareholder activism fail, the one remaining way to remove poorly performing managers is by mounting a hostile takeover.
• C) Likely because hostile takeovers and internal governance systems are substitute mechanisms, researchers have found that boards are less likely to fire managers for poor performance during active takeover markets than they are during lulls in takeover activity.
• D) The effectiveness of the corporate governance structure of a firm depends on how well protected its managers are from removal in a hostile takeover.

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Definitions:

Independent Observers

Individuals or entities that are not involved in the actions or events being observed, ensuring unbiased and objective reporting or analysis.

Meaning Maintenance Model

A psychological theory suggesting that people have a need to maintain a sense of meaning and coherence in their lives, responding to threats by reaffirming or revising their understanding of the world.

Uncertain Situations

Refers to scenarios where the outcome or future events are not predictable or known in advance.

Familiar Meanings

Commonly understood interpretations or connotations associated with words, phrases, signs, or symbols in a shared cultural or community context.