Large companies such as Apple may have millions of co-owners (shareholders, some
ID: 2791519 • Letter: L
Question
Large companies such as Apple may have millions of co-owners (shareholders, sometimes referred to as "principals"), many of whom own small amounts of shares (maybe only a few hundred dollars' worth), and many shareholders are unsophisticated and unfamiliar with the details of the complicated companies they own. The shareholders may own shares in hundreds or thousands of companies through stock indices and mutual funds, making it completely impractical for the millions of owners to jointly run the company well. To address this, highly skilled (we hope) managers/executives make the day-to-day decisions to actually run the company. These "agents" of the principals are supposed to act in the best interests of the principals, but because the managers have their own incentives (do as little work as possible but still get paid, divert company resources like corporate jets for their own personal use, etc.), the shareholders appoint directors (collectively a "board of directors") to supervise the managers on the shareholders' behalf. 2. (a) true (b) falseExplanation / Answer
Ans A True
It is the duty of Board of directors to appoint , supervise and take accountability of the managers (chief executives) on behalf of the shareholders along with other duties (e.g. to provide for fiscal accountability, approve the budget, and formulate policies related to contracts from public or private resources.
Directors are the representatives of the shareholders in the company and they should keep their interest in their mind always.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.