Passage:
In mid-twentieth-century corporate finance, economic historians long debated whether interlocking directorates—where an executive of one firm serves on the board of another—served primarily to facilitate collusion or to mitigate information asymmetry. Early empirical models assumed that board interlocks between commercial banks and manufacturing firms were established at the behest of banks seeking to monitor credit risk. Under this framework, banks leveraged these seats to impose restrictive covenants on debt-heavy enterprises. However, recent archival analyses of financial disclosures from 1950 to 1975 reveal a more complex dynamic. Manufacturing firms with low debt-to-equity ratios were just as likely to invite bank executives onto their boards as were highly leveraged firms. Crucially, these cash-rich enterprises consistently secured lower underwriting fees during subsequent equity issuances managed by investment entities affiliated with those same banks, even though debt monitoring was structurally irrelevant to their capital needs. Furthermore, regulatory filings show that whenever federal antitrust scrutiny targeted specific commercial banks, manufacturing firms swiftly replaced bank-affiliated directors with independent industry experts. This rapid turnover was observed regardless of whether the manufacturing firm possessed outstanding bank loans.
Based on the passage, evaluate the following statement as True or False:
Between 1950 and 1975, a manufacturing firm's decision to remove a bank-affiliated executive from its board could be triggered by regulatory actions against the bank, independent of whether the manufacturing firm held active loans with that bank.
Answer: Answer