The fact that corporations' shares are easily traded within the market has a net effect of acting as a disincentive for managers to favor the interests of shareholders over their own interests.

Question

Quizplus · Accepted Answer

The ease of trading shares in the market actually acts as an incentive for managers to align their interests with those of the shareholders, as poor management decisions can lead to a decrease in share value and potential takeover threats, motivating managers to focus on shareholder value.

The Fact That Corporations' Shares Are Easily Traded Within the Market