Which of the Following Statements Is False

question 28

Multiple Choice

Which of the following statements is false?

• A) The conflict of interest between managers and investors derives from the separation of ownership and control in a corporation.
• B) Any discussion of corporate controls-the system of controls, regulations, and incentives designed to prevent fraud-is a story of conflicts of interest and attempts to maximize them.
• C) Once control and ownership are separated a conflict of interest arises between the owners and the people in control of a corporation.
• D) The separation of ownership and control is perhaps the most important reason for the success of the corporate organizational form. Because any investor can hold an ownership stake in a corporation, investors are able to diversify and thus, with no costs, reduce their risk exposures.

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Definitions:

Excoriation

A skin condition characterized by the repeated picking at one's own skin, often leading to sores and scars.

Compulsive Behavior

Repetitive, often ritualistic actions that an individual feels driven to perform, usually as a response to obsessive thoughts or to reduce anxiety.

OCD-Related Disorders

A category of mental health disorders characterized by obsessions (unwanted, persistent thoughts) and compulsions (repetitive behaviors or mental acts) that significantly interfere with daily living.

Social Phobia

Social phobia is an anxiety disorder characterized by an intense fear of social situations and being judged or negatively evaluated by others.