Undertaking diversiﬁcation of the ﬁrm's product line is more in the interests of managers than shareholders.

Question

Quizplus · Accepted Answer

Managers often pursue diversification in order to increase their own power and prestige within the company, as well as to reduce their personal risk by having a more varied portfolio of products. Shareholders, on the other hand, may not benefit from diversification if it dilutes the focus and effectiveness of the company's core business.

Undertaking Diversiﬁcation of the ﬁRm's Product Line Is More in the Interests