A manager who does not see his or her goal as the maximization of profit

Question

Quizplus · Accepted Answer

If a manager does not prioritize the maximization of profit, they may end up pursuing objectives that conflict with those of the firm's owners. This can lead to a principle-agent problem, where the manager's incentives are misaligned with those of the owners. As a result, they may take actions that benefit themselves rather than the firm as a whole, which can ultimately reduce the value of the firm. Therefore, both options B and C are correct. However, it is possible that a manager who doesn't prioritize profit may still find ways to maximize the value of the firm through alternative strategies, so option A is not necessarily true.

A Manager Who Does Not See His or Her Goal