Which one of the following statements is TRUE?

Question

Quizplus · Accepted Answer

One tool of corporate governance is the threat of removing current management, which can be done by shareholders if they are dissatisfied with the company's performance. This is known as the "threat of hostile takeover" and is a way for shareholders to exert control over the management of the company. The other statements are incorrect. The commission required by the federal housing agency for a small business loan is an example of a transaction cost, not an agency cost. The choice of how much dividends to pay is a decision made by the board of directors, but it is not a tool of corporate governance. Corporate governance is not related to an officer of a corporation being elected to public office. The location of the company headquarters is also not a tool of corporate governance, but rather a strategic decision made by the company.

Which One of the Following Statements Is TRUE