Explain how each of the following market forces helps reduce incentive conflicts between shareholders and management: a)the market for corporate control,b)the managerial labor market,and c)the product market.

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The Answer is The market for corporate control assures that,with sufficient financial disclosure,competing management teams could make hostile takeover offers for firms with poorly performing management teams.The U.S.has a relatively active takeover market.The managerial labor market rewards executives with a good track record by providing a greater number of offers (for other CEO positions and board positions)or greater compensation or both.The product market limits managerial agency problems through the price system.Companies with higher costs that have arisen through poor management will be more likely to fail because their profits will be reduced at the prevailing price.

Explain How Each of the Following Market Forces Helps Reduce