Question

Which of the following statements is true of direct ownership? It allows transfer of power and management to firms in host countries. It leads to the possibility of unauthorized diffusion of firm-specific know-how. It provokes protectionist responses from host countries. It provides a firm with equity ownership rights and management control rights.

Answer 1

Answer:

Direct ownership provides a firm with equity ownership rights and management control rights.

Explanation:

Direct Ownership refers to the ownership of an equity interest in an enterprise; such equity interest includes : the right to take part in the voting rights in that enterprise; the right to receive unburdened economic interest (such as dividends) entitled to the shareholders of that enterprise; and Broad-based BEE schemes, employee share option schemes (ESOPs) and other employee share schemes, where the beneficiaries have the the capacity to elect and remove trustees  and also have the absolute right to receive economic benefits  .

Thus, Direct ownership provides a firm with equity ownership rights and management control rights.