Presumption that corporate managers can be left to act in the best interests of shareholders is based on:

Question

Quizplus · Accepted Answer

The presumption that corporate managers can be left to act in the best interests of shareholders is based on the belief that a poorly performing company will be the subject of takeovers (B) and that the threat of takeovers is sufficient to discipline managers to act in the shareholders' interests (D). This is known as the market for corporate control, which is a mechanism where inefficient firms are replaced by efficient ones through the threat of takeovers. Professional quality (A) and management discipline (C) may be important factors, but they do not fully explain the presumption that managers always act in the best interests of shareholders.

Presumption That Corporate Managers Can Be Left to Act in the Best