Which of the Following Statements Is False

question 11

Multiple Choice

Which of the following statements is false?

• A) In addition to the evidence that board independence matters for major activities such as firing CEOs and making corporate acquisitions, researchers have found a strong connection between board structure and firm performance.
• B) Theoretical and empirical research support the notion that the longer a CEO has served, especially when that person is also chairman of the board, the more likely the board is to become captured.
• C) Most firms that have just gone public either as young companies or as older firms returning to public status after a leveraged buyout (LBO) choose to start with smaller boards.
• D) Boards tend to grow over time as members are added for various reasons. For example, boards are often expanded by one or two seats after an acquisition to accommodate the target CEO and perhaps one other target director.

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Definitions:

Stockholders' Equity

The ownership interest of shareholders in the assets of a company, calculated as total assets minus total liabilities.

Net Income

The amount of profit a company generates after all expenses, taxes, and costs have been subtracted from its total revenue.

Cash Dividends

Dividends paid out in the form of cash from a corporation's earnings to its shareholders.

Dividends Paid

Payments made by a corporation to its shareholders, usually derived from the company's profits.