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Business

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Why shareholders demand that directors and top management should own significant amount of stocks?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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If stock dividends and stock splits don't give shareholders much value, why do you think companies still do this?
Which of the following statements is NOT correct about the rights granted to common stockholders? Group of answer choices a. Stockholders may transfer their right to vote to a second party by means of a proxy. b. Dividends due to common stockholders are cumulative. c. Common stockholders have the right to elect a firm's directors. d. In large, publicly traded firms, managers typically have some stock but their personal holdings are generally insufficient to win voting control.
Explain two reasons for the firm management to prefer stock repurchases over cash dividends.
Which of the following is a characteristic of common stock?a. The right to the residual income after creditors have been paidb. Limited liability in the case of the corporation going bankruptc. Voting rights to elect the board of directorsd. The right to maintain a proportionate share of ownership in the firm (when new shares are issued, stockholders have the first right of refusal)e. All of the above
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16. Which of the following statements is NOT correct about the rights granted to common stockholders? a. Stockholders may transfer their right to vote to a second party by means of a proxy. b. Dividends due to common stockholders are cumulative. c. Common stockholders have the right to elect a firm's directors. d. In large, publicly traded firms, managers typically have some stock but their personal holdings are generally insufficient to win voting control.
Why would a corporation redeem its stock? a. To decrease the per-share book value of the stock held by shareholders b. To increase the per-share price of the stock on the open market c. To increase the per-share book value of the stock held by the corporation d. To decrease the per-share book value of the stock on the open market
Which of the following is not a typical question that must be answered with regard to a private company that is owned by a large number of shareholders? Question 46 options: How and when does the company get money from the sale of its stock? What rate of return does the company promise to pay when it sells stock? What is the dividend yield on preferred shares of companies that hold this stock? Who makes decisions in a company owned by a large number of shareholders?