Which of the Following Statements Is FALSE

question 26

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 structure-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.