Shareholders with diversified portfolios will encourage

Question

Quizplus · Accepted Answer

Shareholders with diversified portfolios have investments in multiple companies, industries, and markets, which means that they are exposed to a variety of risks. They are more likely to prefer that corporate decision-makers be risk-neutral, as this will help to ensure the stability and long-term success of the company, which in turn benefits the shareholders. Risk-preferring behavior by corporate decision-makers may lead to excessive risk-taking, which can result in volatile profits and losses that can harm shareholders.

Shareholders with Diversified Portfolios Will Encourage