Which one of the following statements is TRUE?
A) One tool of corporate governance is monitoring management.
B) One tool of corporate governance is the choice of how much dividends to pay.
C) A company's matching contribution to a retirement plan is a nonpecuniary benefit
D) One tool of corporate governance is stock repurchases.
E) Corporate governance is better when Directors are also employees of the company so they know the business very well.

Question

Quizplus · Accepted Answer

Monitoring management is a tool of corporate governance wherein the board of directors oversee and evaluate the performance of the company's executives, ensuring that they are acting in the best interest of the company and its stakeholders. Choice B refers to dividend policy, which is a financial decision rather than a tool of corporate governance. Choice C refers to an employee benefit, which is not directly related to corporate governance. Choice D refers to stock repurchases, which can be used as a tool of corporate governance but is not the only one. Choice E is incorrect; while having Directors who are familiar with the company can be beneficial, it is not a necessary condition for effective corporate governance.

Which One of the Following Statements Is TRUE