Which of the following mechanisms can help align the behavior of managers with the goals of stockholders?
A) Well-designed management compensation
B) Managerial labor market
C) An independent board of directors
D) All of the above

Question

Quizplus · Accepted Answer

Well-designed management compensation can ensure that managers are incentivized to act in the best interest of stockholders. The managerial labor market can also help align behavior, as managers who do not act in the best interest of stockholders may be replaced. An independent board of directors can provide oversight and ensure that managerial actions are aligned with the goals of stockholders. Therefore, all of the above mechanisms can help align the behavior of managers with the goals of stockholders.

Which of the Following Mechanisms Can Help Align the Behavior