Which of the following statements is true?
A) Shareholders as a group have little or no ability to force managers to pursue maximization of the firm's value.
B) The effectiveness of a board of directors in monitoring managers is enhanced by appointing members from the firm who are well-informed about the management problems facing the firm.
C) Reducing the amount of debt financing can reduce divergence between the shareholders' interests and the manager's interests.
D) Equity ownership by managers is thought to be one of the most effective corporate control mechanisms.
E) All of the above are true.
Correct Answer:
Verified
Q10: economic profit is positive,
A)total revenue exceeds total
Q11: A market
A)raises the transaction costs of doing
Q12: When a firm is a price-taking firm,
A)the
Q13: In a perfectly competitive market,
A)all firms produce
Q14: Economic theory is a valuable tool for
Q16: A price-taking firm can exert no control
Q17: Which of the following statements is false?
A)Explicit
Q18: The principal-agent problem arises when
A)the principal and
Q19: Moral hazard
A)occurs when managers pursue profit maximization
Q20: Economic profit
A)is a theoretical measure of a
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