Which of the Following Statements Is True Regarding the Composition

question 12

Multiple Choice

Which of the following statements is true regarding the composition of the board of directors?

• A)CEOs often favor significant representation by board outsiders.
• B)Institutional investors favor people who have intimate knowledge of the firm's business affairs.
• C)Making the CEO also the chairman of the board of directors helps avoid bitter divide within a corporation.
• D)CEOs often favor the use of people who have intimate knowledge of the firm's business affairs.
• E)Significant representation by board outsiders increases the potential for CEO duality.

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Definitions:

Utility

The want-satisfying power of a good or service; the satisfaction or pleasure a consumer obtains from the consumption of a good or service (or from the consumption of a collection of goods and services).

Behavioral Economics

A field of economics that studies how psychological, cognitive, emotional, cultural, and social factors affect economic decisions of individuals and institutions.

Limited Knowledge

The state of having restricted information or understanding about a subject or situation, emphasizing incomplete or finite expertise.

Behavioral Economists

Behavioral economists study the effects of psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions and how those decisions vary from those implied by classical economics.