Which of the following statements is true?
A)In a well-run, publicly-held company, management relies on the shareholder input to decide what policies will, in fact, maximize the value of their firm.
B)Because it is difficult for management to determine what will maximize firm value in the imperfect world of reality, it is critical for the government to pass laws that will result in
Value-maximizing decisions in all firms.
C)Although it should be clear to corporate managers what steps are necessary to maximize firm value, managers choose to look out for their own best interests instead.
D)None of the above is a true statement.

Question

Quizplus · Accepted Answer

None of the statements is entirely true. While shareholder input is important in decision-making, management also takes into account a range of other factors. Similarly, government intervention cannot guarantee value-maximizing decisions in all firms, and while some managers may prioritize their own interests, this is not always the case. The reality is more complex and nuanced than any of the given statements suggest. None of the statements are entirely true. While management should take shareholder input into account, it is ultimately their responsibility to make decisions that will maximize firm value. Additionally, while government regulations can influence firm behavior, they cannot guarantee value-maximizing decisions in all firms. Finally, while there may be a conflict of interest between managers and shareholders, it does not necessarily mean that managers will always act in their own best interest instead of maximizing firm value.

Which of the Following Statements Is True