The ability of an investing company to affect the operating and financial activities of another company, even though the investor holds less than 50% of the stock, is known as
A) significant influence.
B) control.
C) a combination.
D) influence and control.

Question

Quizplus · Accepted Answer

Significant influence refers to the ability of an investing company to have an impact on the strategic, operating, and financial decisions of another company, even though the investor holds less than 50% of the stock. This is typically achieved through representation on the board of directors, or through other significant relationships with the company. Control, on the other hand, typically requires ownership of a majority of the stock, and gives the investor the ability to direct the activities of the company in a more comprehensive way. A combination of significant influence and control may also be possible in certain circumstances, but is not the same as significant influence alone.

The Ability of an Investing Company to Affect the Operating