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.

---

Definitions:

Net Fixed Assets

The value of a company's property, plant, and equipment minus depreciation, representing long-term investments in physical assets.

Straight-line Basis

A method of calculating depreciation of an asset, which evenly spreads the cost over its useful life.

Operating Income

Earnings before interest and taxes (EBIT), which shows a company's profit from its core business operations.

Tax Payments

Tax Payments are the compulsory financial charges or levies paid to the government by individuals, businesses, or other legal entities to fund public expenditures.