Managerial capitalism can result in inefficiency when the incentives of management are not structured properly.

Question

Quizplus · Accepted Answer

Managerial capitalism involves a separation of ownership and control. The managers who control the company may prioritize their own goals and interests over maximizing shareholder value, leading to inefficiency. This can be exacerbated if the incentives for management are not aligned with overall company performance. Therefore, managerial capitalism can result in inefficiency when incentives are not structured properly.

Managerial Capitalism Can Result in Inefficiency When the Incentives of Management