Which one of the following statements is TRUE?
A) One tool of corporate governance is how the company's charter affects the likelihood of a takeover.
B) One tool of corporate governance is stock repurchases.
C) One tool of corporate governance is a company's tax avoidance strategy.
D) One tool of corporate governance is choosing a good investment banker.
E) Creditors have a claim on a firm's earning stream through the dividend payments they receive.

Question

Quizplus · Accepted Answer

One tool of corporate governance is how the company's charter affects the likelihood of a takeover. This is because a company's charter can limit hostile takeovers and protect the interests of shareholders. Stock repurchases, tax avoidance strategies, and choosing a good investment banker are all strategies a company may use, but they do not directly relate to corporate governance. Creditors do not have a claim on a firm's earning stream through dividend payments.

Which One of the Following Statements Is TRUE