Giving managers an ownership stake in a company is an example of
A) a command system.
B) an incentive system.
C) a system that encourages managers to become agents that monitor their principals.
D) economies of scope.

Question

Quizplus · Accepted Answer

An incentive system is a system that encourages managers to take actions that are in the best interests of the company. Giving managers an ownership stake in a company is an example of an incentive system because it gives managers a financial incentive to make decisions that will increase the value of the company.

Giving Managers an Ownership Stake in a Company Is an Example