Which of the Following Statements Is True with Regards to the Political

Multiple Choice

Which of the following statements is true with regards to the political cost hypothesis?

A) Political costs arise as a result of an entity's relationships with shareholders and lenders.
B) Managers of financial institutions may prefer to increase profits to reduce government pressure to pass on interest rate cuts.
C) Smaller entities are more likely to be the target of environmental groups.
D) Managers of entities that are more politically visible are expected to choose accounting policies that reduce profit in order to avoid political costs.