Which of the Following Control Mechanisms Is Commonly Used to Ensure

question 55

Multiple Choice

Which of the following control mechanisms is commonly used to ensure that executives and managers,as agents of the firm's owners,act in the best interests of those owners?

• A)Pay plan incentives do not align the interests of management and stockholders.
• B)The establishment of a strong,independent board of directors.
• C)Stockholders with a large stake in the firm taking a weak role on the board.
• D)Stockholders read board of director reports.
• E)People read what is stated in newspapers.

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Definitions:

Marginal Tax Rate

The rate of tax applied to the last dollar of income, reflecting the tax bracket into which the incremental income falls.

Average Tax Rate

The Average Tax Rate is the proportion of the total taxable income paid as taxes, calculated by dividing the total amount of taxes paid by the total income.

Defense Spending

Government expenditure on military and defense-related activities, including salaries, equipment, research, and development.

National Debt

The total fiscal debt amassed by a country's government, sourced through a variety of methods.