Which one of the following statements correctly describes the bonding hypothesis?
A) Banks require covenants when lending to risky companies.
B) The large shareholder commits him/herself not to expropriate the minority shareholders by subjecting the firm to more stringent foreign regulation.
C) Shareholders bond themselves to managers by agreeing not to sell their shares over a specified period.
D) None of the above.
Correct Answer:
Verified
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