Question

Which of the following statements is correct regarding the board of directors?

1) The board of directors represents the shareholders and is responsible for ensuring the company is being run to benefit society at large.
2) The board of directors represents society at large and is responsible for ensuring the company is being run to benefit the shareholders.
3) The board of directors represents society at large and is responsible for ensuring the company is being run to benefit society.
4) The board of directors represents the shareholders and is responsible for ensuring the company is being run to benefit the shareholders.

Answer 1

The board of directors represents the shareholders and is responsible for ensuring the company is being run to benefit the shareholders.

Step-by-step explanation:

The correct statement regarding the board of directors is:

4) The board of directors represents the shareholders and is responsible for ensuring the company is being run to benefit the shareholders.

In theory, the board of directors helps to ensure that the firm runs in the interests of the true owners - the shareholders. While they have a responsibility to consider the interests of society at large, their primary role is to represent the shareholders and protect their interests. The board of directors is responsible for making important decisions, setting strategic direction, and appointing top executives.