Final answer:
The board of directors is elected to act as agents for the shareholders, ensuring that the company is managed in their best interests. The correct answer to the question is c. stockholders, as they are the true owners of the company and the board is responsible for overseeing the company on their behalf.
Step-by-step explanation:
The board of directors serves a pivotal role in corporate governance, particularly in representing and safeguarding the interests of the shareholders.
These members are elected by the shareholders and act as their agents, ensuring that the company is managed in a way that benefits the true owners of the company. While the top executives of a company have significant influence over the selection of board members, the ultimate responsibility of the board is to provide oversight and direction that align with the shareholders' interests.
They are the first line of defense in corporate governance, supported by auditing firms and large outside investors, who together help ensure accountability within a firm. The downfall of Lehman Brothers is a prime example where this corporate governance failed in its role to provide accurate financial information to investors.
The correct option, in this case, is c. stockholders.