Corporate shareholders are best protected from incompetent management decisions by
A)the ability to engage in proxy fights.
B)management's control of pecuniary rewards.
C)the ability to call shareholder meetings.
D)the threat of takeover by other firms.

Question

Quizplus · Accepted Answer

The threat of takeover by other firms serves as a strong mechanism to ensure competent management decisions as it signals to management that their job may be at risk if they do not act in the best interests of the shareholders. This provides a strong incentive for management to make decisions that will benefit the company and its shareholders. The other options, while important, are not as effective in protecting shareholders from incompetent management decisions.

Corporate Shareholders Are Best Protected from Incompetent Management Decisions by