Question

which of the following statements is correct? one disadvantage of organizing a business as a corporation rather than a partnership is that the equity investors in a corporation are exposed to unlimited liability. using restrictive covenants in debt agreements is an effective way to reduce conflicts between stockholders and managers. managers generally welcome hostile takeovers since the
aider\ generally offers a price for the stock that is higher than the price before the takeover action started. the managers of established, stable companies sometimes attempt to get their state legislatures to impose rules that make it more difficult for raiders to succeed with hostile takeovers. most business in u.s. is conducted by corporations, and corporations popularity results primarily from their favorable tax treatment.

Explanation:

1. In a corporation, equity - investors have limited liability, not unlimited, so the first statement is wrong.
2. Restrictive covenants in debt agreements are mainly to protect bondholders from stockholders' actions that may harm bondholders' interests, not to reduce stockholder - manager conflicts, so the second statement is wrong.
3. Managers usually oppose hostile takeovers as they may lose their jobs, so the third statement is wrong.
4. Managers of established, stable companies may try to get state legislatures to impose rules to make hostile takeovers more difficult to protect their positions and the company's status quo, which is correct.
5. Corporations' popularity is not mainly due to favorable tax treatment as they are often subject to double - taxation, so the fifth statement is wrong.

Answer:

The managers of established, stable companies sometimes attempt to get their state legislatures to impose rules that make it more difficult for raiders to succeed with hostile takeovers.