A combination of well-designed management compensation contracts,the market for corporate takeovers and a well-informed labour market should:

Question

Quizplus · Accepted Answer

A combination of well-designed management compensation contracts, the market for corporate takeovers, and a well-informed labour market should ensure that, on average, managers work in the best interests of owners. This means they will not only act in their own self-interest but also in the interest of the company they manage. As a result, it reduces the agency problem and increases the efficiency of the firm. Consequently, this will lead to the maximization of shareholder value.

A Combination of Well-Designed Management Compensation Contracts,the Market for Corporate