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:

Content Validity

The extent to which a test measures all facets of the concept it intends to assess.

Construct Validity

The extent to which a test or instrument measures the theoretical construct or concept it is intended to measure.

Concurrent Validity

The degree to which the results of a test correlate with the results of an established test measuring the same construct at the same time.

Content Validity

The extent to which a test measures all aspects of the concept or construct it is intended to assess, ensuring the test content is representative of the domain it's supposed to cover.