Blockholders:

Question

Blockholders:

Quizplus · Accepted Answer

Blockholders, who hold a large percentage of shares in a company, internalize more benefits of the corporation's performance than small shareholders. This implies they have a greater incentive to participate in the governance process to maximize their returns. Therefore, A is the best answer.

Answer: B, C, D are incorrect.

B is incorrect because extracting private benefits is not adding value to the firm, but rather taking away from the corporation's value through self-interested behavior.

C is incorrect because institutional investors, such as mutual funds, pension funds, and hedge funds, have more resources, diversification, and can offer greater monitoring than blockholders.

D is also incorrect because blockholders can be appointed as a manager of the firm, but it is not necessary or always desirable. It depends on their management skills and willingness to act in the best interest of the company.