The _____ of using the market for corporate control make it important to build incentives into executive pay packages that can reduce _____ by better aligning the incentives of shareholders and managers.

Question

Quizplus · Accepted Answer

The market for corporate control can have costs and uncertainties associated with it, such as the potential for hostile takeovers and shareholder activism. These issues can be exacerbated by principal/agent problems, which occur when the interests of shareholders and managers are not aligned. Building incentives into executive pay packages can help to reduce these problems by aligning the interests of both parties. Hence, option B is the correct answer.

The _____ of Using the Market for Corporate Control Make