Managers protected by golden parachutes may be more willing to make decisions that increase the company's earnings in the long run, even though the decisions adversely affect the stock price in the short run.

Question

Quizplus · Accepted Answer

Golden parachutes provide financial security to managers if they lose their job due to a takeover or merger, reducing their fear of negative short-term consequences for making decisions that are beneficial in the long term but might initially upset the market or reduce the stock price.

Managers Protected by Golden Parachutes May Be More Willing to Make