a firm's stockholders are given the preemptive right, this means that stockholders have the right to call for a meeting to vote to replace the management Without the preemptive right, dissident stockholders would have to seek a change in management through a proxy fight.

Question

Quizplus · Accepted Answer

The statement about preemptive rights is incorrect. Preemptive rights give existing shareholders the right to purchase any newly issued shares of stock in order to maintain their ownership percentage. The correct definition of the term for the scenario described would be "proxy access," which is the ability of shareholders to include candidates for director in the company's proxy materials. Without proxy access, dissident shareholders would have to mount their own proxy solicitation campaign in order to nominate candidates for the board of directors.

A Firm's Stockholders Are Given the Preemptive Right, This Means