Which of the Following Statements Is FALSE

question 22

Multiple Choice

Which of the following statements is FALSE?

• A)The incentives come from owning stock in the company and from compensation that is sensitive to performance.
• B)The role of the corporate governance system is to mitigate the conflict of interest that results from the combination of ownership and control without unduly burdening managers with the risk of the firm.
• C)Punishment comes when a board fires a manager for poor performance or fraud,or when,upon failure of the board to act,shareholders or raiders launch control contests to replace the board and management.
• D)The corporate governance system attempts to align interests by providing incentives for taking the right action and punishments for taking the wrong action.

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Definitions:

Affirmative Defense

A set of circumstances that indicates that a defendant should not be held liable, even if the plaintiff proves all of the facts in a complaint.

Assumption of the Risk

A legal doctrine where an individual knowingly and voluntarily assumes the risk of an activity, thereby reducing the liability of others.

Demurrer

A legal objection that an opponent's point is irrelevant or invalid, while conceding the factual basis of the point.

Special Jurisdiction

The power of a court to hear only certain kinds of cases.