Identify all the correct statements:
A)Managers naturally seek to maximize shareholders' wealth
B)Managers act in their own interests,and so there is no way to align their interests with those of the owners
C)To motivate managers in non-profit firms,no employee incentives are needed
D)To align the interests of managers and owners,owners must design systems to monitor and reward management behavior that increases the firm's profits
E)none of the above

Question

Quizplus · Accepted Answer

This statement correctly identifies that in order to align the interests of managers and owners, systems must be put in place to monitor and reward behavior that increases profits. A is incorrect because maximizing shareholders' wealth is not necessarily a natural inclination of managers. B is incorrect because there are ways to align interests through proper incentive structures. C is incorrect because even non-profit firms must motivate their employees in some way.

Identify All the Correct Statements