Which of the Following Statements Is FALSE

question 2

Multiple Choice

Which of the following statements is FALSE?

• A) An active takeover market is part of the system through which the threat of dismissal is maintained.
• B) When internal governance systems such as ownership, compensation, board oversight, and shareholder activism fail, the one remaining way to remove poorly performing managers is by mounting a hostile takeover.
• C) Likely because hostile takeovers and internal governance systems are substitute mechanisms, researchers have found that boards are less likely to fire managers for poor performance during active takeover markets than they are during lulls in takeover activity.
• D) The effectiveness of the corporate governance structure of a firm depends on how well protected its managers are from removal in a hostile takeover.

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Definitions:

Life Insurance Policy

A contract between an individual and an insurance company, where the insurer pays a designated beneficiary a sum of money upon the death of the insured person.

Beneficiary

A person or entity entitled to receive benefits from a will, trust, insurance policy, or other legal agreements.

Divorced

The legal dissolution of a marriage by a court or other competent body.

Proceeds

The total amount of money received from a sale or transaction.