In order to minimize the temptation for managers to act in their own self-interest,governance mechanisms exist for implementation consideration.Which of the following is not a primary means for monitoring managerial behavior?
A) a board of directors that acts in the best interests of shareholders to create short-term value
B) shareholder activism in which owners view themselves as shareowners
C) a board of directors that acts in the best interests of shareholders to create long-term value
D) managerial incentives to align management interests with those of the stockholders

Question

Quizplus · Accepted Answer

First, there are two primary means of monitoring the behavior of managers which include:(1) a committed and involved board of directors that acts in the best interests of the shareholders to create long-term value and (2) shareholder activism, wherein the owners view themselves as shareowners instead of shareholders and become actively engaged in the governance of the corporation. Finally, there are managerial incentives, sometimes called contract-based outcomes, which consist of reward and compensation agreements. Here the goal is to carefully craft managerial incentive packages to align the interests of management with those of the stockholders.

In Order to Minimize the Temptation for Managers to Act