The action that is likely to be the least effective in aligning shareholder and managers interests is:

Question

BlackTom AI · Accepted Answer

When evaluating which action is least effective at aligning shareholder and manager interests, we must consider how each option incentivizes managers to act in shareholders' best interests.
Option A: 'providing bonuses to managers based on performance targets.' This approach ties manager rewards to measurable outcomes, which generally promotes alignment because higher shareholder value tends to accompany better performance, provided targets are well-structured and not easily inflated.
Option B: 'keeping manager salaries fixed and increasing the award of stock options.' By tying compensation to the company's stock performance through options, managers share in upside and downside, creating a direct link between their actions and shareholder value, which typically enhances alignment.
Option C: 'the automatic annual increase of manager salaries.' This mechanism gives managers a guaranteed pay raise regardless of performance, which weakens the link between effort and compensation, reducing alignment with shareholder interests and potentially encouraging complacency or risk-taking without reward.
Option D: 'the threat of the firm being taken over.' The possibility of a takeovers serves as a governance discipline, since managers know that poor performance could trigger a takeover or proxy contest, motivating them to pursue value-enhancing strategies to avoid lose-lose outcomes for control.
In summary, A, B, and D create or reinforce incentives that connect managerial rewards to firm performance or governance discipline, whereas C provides a automatic, non-performance-based compensation path that undermines alignment with shareholders. Hence, Option C is the least effective option for aligning interests.

The action that is likely to be the least effective in aligning shareholder and managers interests is:单项选择题

类似问题

Principal-Agent Dilemma is the basis for corporate governance, and results from the separation of control between:

According to agency theory, monitoring would be cheaper and more effective if Blank ______.

In agency theory, a business's principal is typically a(n) Blank ______.

Which of the following focuses on how employee compensation can be used to align the divergent interests and goals of an organizations' various stakeholders?

Select all the correct alternatives regarding the Principal-Agent problem in corporations:

The relationship between stockholders and management can best be described as a(n) Blank ______ relationship.

Which of the following is not part of the agency relationship?

The key aspect of the agency relationship for the corporate form of business is that:

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单