Which of the Following Statements Is False

question 14

Multiple Choice

Which of the following statements is false?

• A) The relationship between managerial ownership and firm value is unlikely to be the same for every firm, or even for different executives of the same firm.
• B) Even with the risk benefits of separating ownership and control, there are still examples of corporations in which the top managers have substantial ownership interests.
• C) Academic studies do not support the notion that greater managerial ownership is associated with fewer value-reducing actions by managers.
• D) While increasing managerial ownership may reduce perquisite consumption, it also makes managers harder to fire-thus reducing the incentive effect of the threat of dismissal.

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Definitions:

Net Income

The net income a company achieves once all costs and taxes are subtracted from its total revenues.

Cash Flow

The net amount of cash and cash-equivalents moving into and out of a business, crucial for assessing liquidity, flexibility, and overall financial performance.

Net Capital Losses

The result of selling a capital asset for less than its purchase price, which can be used to offset capital gains for tax purposes.

Corporations

Business entities that are legally recognized as individual entities, separate and distinct from their owners.