Which one of the following statements is TRUE?
A) One tool of corporate governance is the threat of removing current management.
B) The commission required by the Federal Housing Agency for a small business loan is an example of an agency cost.
C) One tool of corporate governance is the choice of how much dividends to pay.
D) Corporate governance is when an officer of a corporation is elected to public office.
E) One tool of corporate governance is the location of the company headquarters.

Question

Quizplus · Accepted Answer

One tool of corporate governance is the threat of removing current management, which serves as a deterrent for managers to act in their own interest rather than the interest of shareholders. The other options are either incorrect or irrelevant to corporate governance.

Which One of the Following Statements Is TRUE