Which of the Following Statements Is FALSE

question 29

Multiple Choice

Which of the following statements is FALSE?

• A)The shareholders as a group elect a board of directors to monitor managers.The directors themselves,however,have the same conflict of interest-monitoring is costly and in many cases directors do not get significantly greater benefits than other shareholders from monitoring the managers closely.
• B)In principle,the board of directors hires the executive team,sets its compensation,approves major investments and acquisitions,and dismisses executives if necessary.
• C)In the United States,the board of directors has a clear fiduciary duty to protect the interests of both the owners of the firm (the shareholders)and the interests of other stakeholders in the firm (such as the employees).
• D)When the ownership of a corporation is widely held,no one shareholder has an incentive to bear the cost of monitoring,because she bears the full cost of monitoring but the benefit is divided among all shareholders.

---

Definitions:

Brainstorming Processes

A technique used to generate a large number of ideas for the solution of a problem in a group setting.

Minimized

The act of reducing something to the smallest possible amount or degree.

Coordinating

The process of organizing people or groups so that they work together efficiently and effectively towards a common goal.

Mediating

A process by which a neutral third party helps resolve a dispute or conflict between two or more parties.