Which of the Following Statements Is FALSE

question 1

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 minimize 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:

Decision-making

The procedure of choosing by pinpointing a decision, collecting information, and evaluating different solutions.

Abilene

A paradox in decision-making in which a group makes a collective decision that is counter to the preferences of many or all of its members due to a failure in communication or assumption of consensus.

Un-air-conditioned Car

A vehicle lacking a system to cool and dehumidify the air inside, potentially leading to discomfort in warm weather conditions.

Risky Shift

The phenomenon where groups tend to make riskier decisions together than individuals would on their own.