Which of the following encourages managers to act in the shareholders' interests?

Question

Quizplus · Accepted Answer

Performance based compensation incentivizes managers to increase shareholder value in order to receive bonuses or other forms of additional compensation. Audits ensure that managers are accurately reporting financial information, which increases transparency and accountability to shareholders. The threat of a hostile takeover can also encourage managers to act in the shareholders' interests, as they may be replaced if they do not take actions to increase shareholder value. Therefore, all of the options listed are effective in encouraging managers to act in the shareholders' interests.

Which of the Following Encourages Managers to Act in the Shareholders