There is often a divergence between the shareholder wealth maximization goal and the actual goals pursued by management. The primary reason for this is ____.
A) geographical dispersion of shareholders
B) separation of ownership and control
C) age differences between managers and shareholders
D) that both have their own agendas

Question

Quizplus · Accepted Answer

The separation of ownership and control means that the shareholders, who own the company, hire managers to run it. These managers may have their own goals and priorities that do not necessarily align with maximizing shareholder wealth. This can result in a divergence between the two goals.

There Is Often a Divergence Between the Shareholder Wealth Maximization