How can the following quotation best be explained: "Stockholders control the activities of a corporation"?
A) All stockholders vote on all the major issues and problems that a company faces on a monthly basis.
B) Stockholders are intricately involved in the daily operations of a corporation.
C) Stockholders elect the board of directors, and this board is responsible for appointing corporate officers who manage the daily business of the corporation.
D) Stockholders vote for the members of the board of directors, and this board makes all the daily business decisions for the corporation.
E) Stockholders usually call company management and tell executives better ways to run the organization.

Question

Quizplus · Accepted Answer

Stockholders elect the board of directors, and the board is responsible for appointing corporate officers who manage the daily business of the corporation. The board of directors is ultimately responsible for making major decisions and setting policy for the corporation. While stockholders do have some input through their election of the board, they do not control daily operations or have a direct hand in decision-making. Option A, B, and E are false as they do not accurately explain the role of stockholders in controlling a corporation. Option D is somewhat accurate but not the complete picture, as the board appoints officers who manage daily business, but ultimately the board sets the direction and strategy for the corporation.

How Can the Following Quotation Best Be Explained: "Stockholders Control