Institutional investors can ensure that a corporation pursues goals that are in their best interest by _____.
A)binding the management with stockholder-sponsored proposals
B)ensuring that the management is working toward maximizing current earnings
C)compensating managers of the corporation on the basis of the firm's performance in the short run
D)implementing policies that encourage management to make decisions that maximize managers' wealth
E)monitoring its financial performance to ensure that managers pursue the goal of wealth maximization

Question

Institutional investors can ensure that a corporation pursues goals that are in their best interest by _____. 
A)binding the management with stockholder-sponsored proposals
B)ensuring that the management is working toward maximizing current earnings
C)compensating managers of the corporation on the basis of the firm's performance in the short run
D)implementing policies that encourage management to make decisions that maximize managers' wealth
E)monitoring its financial performance to ensure that managers pursue the goal of wealth maximization

Quizplus · Accepted Answer

Monitoring financial performance ensures that managers are aligned with the goal of wealth maximization, which is typically in the best interest of institutional investors.

Institutional Investors Can Ensure That a Corporation Pursues Goals That