Question

In: Finance

US firms are: ( you may choose more than one answer) a. all subject to the...

US firms are: ( you may choose more than one answer)

a.

all subject to the same corporate governance provisions and their shareholders enjoy similar rights

b.

allowed to have multiple classes of shares

c.

incorporated in a state and their corporate governance follows the laws of that state

d.

usually rank among the top in term of corporate governance in the world

Solutions

Expert Solution

Since, the context of the above question is not provided, I have answered this question in General Common Sense.

US Firns:

a) all subject to the same corporate governance provisions and their shareholders enjoy similar rights: This option will not be selected, as the Corporate Governance provisions may defer according to the type of firm it is. The various types of Firms are Companies, Limited Liability Partnership, Partnership,etc. Therefore, the companies will be bound by different corporate governance and the shareholders will be having different rights according to the investment made by them in the company.

b) allowed to have multiple classes of shares: This option is to be selected, as this has been allowed under the Companies Act. A firm may have different kinds of class of shares, Ordinary Shares, Preference Shares, etc. Therefore, the firms can according to their Articles of Association select the class of shares they want to have.

c) Incorporated in a state and their corporate governance follows the laws of that state : This option is to be selected as the State in which the company is Incorporated is the one who has Law over the Firm. So, since the state laws govern the US Firms, the laws of the state are to be followed by the US firms. This is mandantory and not following these may result in penalties and heavy fines.

d) usually rank among the top in term of corporate governance in the world: This option is to be selected, the US firms are known to follow the terms of corporate governance and the best in the world. Thus, the US firms are usually in the top rank order of companies having the best corporate governance in the world

Therefore, the options selected b, c and d


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