Methods to encourage managers to act in shareholders' best interest include
I. Threat of takeover
II. Proxy fights for control of the Board of Directors
III. Tying managers' compensation to share price performance

Question

Quizplus · Accepted Answer

All three methods mentioned in the statement are effective ways of encouraging managers to act in shareholders' best interests. The threat of takeover and proxy fights for control of the Board of Directors can increase the pressure on managers to make decisions that benefit the shareholders. Tying managers' compensation to share price performance can align their interests with those of the shareholders and motivate them to work towards increasing the company's value. Hence, all three methods (I, II, and III) can be effective in ensuring that managers act in shareholders' best interests.

Methods to Encourage Managers to Act in Shareholders' Best Interest