Final answer:
The statement that the board of directors is responsible for responding to stakeholders' pressures is true, but executive influence can affect board member selection, potentially impacting the balance of power and the board's effectiveness in representing shareholders' interests.
Step-by-step explanation:
It is true that the board of directors is responsible for determining how a firm responds to stakeholders' power and pressures. While the board is supposed to represent the interests of the shareholders, who are the true owners of the company, executive influence can significantly impact the selection of board members. This influence can lead to a board that is more amenable to the desires of the executives than to the diverse concerns of the shareholders. Therefore, although in theory the board should ensure the company serves the interests of shareholders, in practice, the balance of power may be skewed by the executives' role in board selection.