Which one of the following statements is TRUE?
A) Management is said to be entrenched when senior managers are unlikely to be fired.
B) A company's matching contribution to a retirement plan is a nonpecuniary benefit.
C) Company sponsorship of a local charity is an example of a nonpecuniary benefit.
D) A manager/shareholder agency conflict arises when shareholders sell their stock even though management says the stock is undervalued.
E) A manager/shareholder agency conflict arises when the board of directors pays a larger dividend than the firm's earnings could support.

Question

Quizplus · Accepted Answer

Management is considered entrenched when they have a strong position of power and control within a company, often making it difficult for shareholders to remove them, even if their performance is poor. This can be due to factors such as their long tenure, relationships with the board, or significant ownership stakes. The other statements are not accurate definitions or examples of agency conflicts or nonpecuniary benefits.

Which One of the Following Statements Is TRUE