The management of Five Square Corp.wants to reduce the separation between ownership (by shareholders)and control of the firm (by professional managers).Which of the following practices would best help the company do this?
A) Allowing employees to purchase the stock of the company at a discounted rate
B) Reinvesting the annual profits of the company into research and development
C) Issuing new additional shares to the existing stockholders in proportion to their current holdings
D) Declaring the annual profits as bonus dividends to the existing stockholders

Question

Quizplus · Accepted Answer

Allowing employees to purchase the stock of the company at a discounted rate would best help the company reduce the separation between ownership and control of the firm. Many companies turn employees into shareholders through employee stock ownership plans (ESOPs). These plans allow employees to purchase stock at a discounted rate or use company stock as an investment vehicle for retirement savings.

The Management of Five Square Corp