Which statement describes a feature of a publicly held company?

• A. Shares are sold to the general public, and ownership is separated from control, with a board of directors.
• B. The company avoids a board of directors.
• C. Ownership is concentrated and control directly linked to shareholders.
• D. Only managers hold shares with no external investors.

Answer: (A)

Publicly held companies are set up so that shares are sold to the general public, spreading ownership among many investors. Because ownership is dispersed, those owners don’t run the company day-to-day. Instead, they elect a board of directors to represent their interests and oversee the company’s management. The board hires and monitors senior managers, setting broad strategy and ensuring accountability. This governance structure—public share ownership, separation of ownership from control, and a board of directors—is what the statement describes.

The other ideas don’t fit: ownership isn’t typically concentrated in a few hands, and there is usually a board to provide oversight; and publicly held firms do involve external investors beyond just managers holding shares.