Which of the Following Statements Is False

question 39

Multiple Choice

Which of the following statements is false?

• A) Researchers have hypothesized that boards with a majority of outside directors are better monitors of managerial effort and actions.
• B) Studies have found that firms with independent boards make fewer value-creating acquisitions but are more likely to act in shareholders' interests if targeted in an acquisition.
• C) One early study showed that a board was more likely to fire the firm's CEO for poor performance if the board had a majority of outside directors.
• D) Although the firm's stock price increases on the announcement of its addition of an independent board member, the increased firm value appears to come from the potential for the board to make better decisions on acquisitions and CEO turnover rather than from improvements in the firm's operating performance.

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Definitions:

Income Tax Expense

The total amount of income tax that a company is obliged to pay to tax authorities, based on its earnings.

Taxes Payable

The amount of tax liability a company or individual owes to a tax authority but has not yet paid.

Preferred Dividends

Preferred dividends are fixed dividend payments issued to preferred shareholders, prioritized over common stock dividends.

Earnings Per Share

A financial metric that indicates the portion of a company's profit allocated to each outstanding share of common stock.