Which one of the following statements is TRUE?
A) A manager not closing a factory that is losing money but which is in his hometown is an example of a manager-shareholder conflict.
B) Management is said to be entrenched when the senior managers are consuming excessive perquisites
C) A company's matching contribution to a retirement plan is a nonpecuniary benefit.
D) Company sponsorship of a local charity is an example of a nonpecuniary benefit.
E) A manager/shareholder agency conflict arises when shareholders sell their stock even though management says the stock is undervalued.

Question

Quizplus · Accepted Answer

A manager not closing a factory that is losing money but which is in his hometown, despite it being against the shareholders' interest, is an example of a manager-shareholder conflict. This is because the manager is putting personal interests (keeping the factory open in his hometown) above the financial interests of the shareholders (who would benefit from closing a losing operation).

Which One of the Following Statements Is TRUE