Which of the Following Actions Would Be Likely to Encourage

question 37

Multiple Choice

Which of the following actions would be likely to encourage a firm's managers to make decisions that are in the best interests of shareholders?

• A) The percentage of executive compensation that comes in the form of cash is increased and the percentage coming from long-term stock options is reduced.
• B) The state legislature passes a law that makes it more difficult to successfully complete a hostile takeover.
• C) The percentage of the firm's stock that is held by institutional investors such as mutual funds,pension funds,and hedge funds rather than by small individual investors rises from 10% to 80%.
• D) The firm's founder,who is also president and chairman of the board,sells 90% of her shares.
• E) The firm's board of directors gives the firm's managers greater freedom to take whatever actions they think best without obtaining board approval.

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Definitions:

Aerobic Respiration

A metabolic process in which cells break down glucose and other molecules in the presence of oxygen to produce energy, carbon dioxide, and water.

Cytoplasm

The jelly-like material that makes up much of a cell inside the cell membrane, and, in eukaryotic cells, surrounds the nucleus.

Mitochondrion

A membrane-bound organelle found in most eukaryotic cells that produces energy through cellular respiration, often referred to as the powerhouse of the cell.

Electron Transport Phosphorylation

The process through which ATP is produced during the final stages of cellular respiration in the mitochondria, driven by the electron transport chain.