Which statement about investor-owned (for-profit) corporations is incorrect?

• A. The stock trades on public markets
• B. The board is elected by stockholders
• C. When an individual sells his stock, the company receives the proceeds from the sale
• D. The primary goal is to maximize shareholder value

Answer: (C)

In investor-owned, for-profit corporations, ownership is represented by shares that trade in public markets, providing liquidity for investors. The board is elected by stockholders to govern the company on their behalf. The usual aim is to maximize shareholder value, aligning management with the interests of owners. The key point about stock sales is that when an individual sells their stock, the cash goes to the seller, not to the company. The company only receives cash from stock arrangements that involve issuing new shares in the primary market or other financing activities, not from ordinary secondary-market trades between investors. That makes the statement about the company receiving proceeds from selling stock incorrect.