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:

Budget Constraint

A concept in economics representing all the combinations of goods and services that a consumer can afford given their income level and the prices of goods.

Opportunity Set

The range of options available for a person or organization to choose from, given their resources and constraints.

Income

Money received, especially on a regular basis, for work or through investments.

Monthly Income

The total amount of money earned or received by an individual or household within the span of a month.