Which of the following mechanisms can help to 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 provide incentives for managers to work towards the goals of stockholders, as compensation packages can be tied to corporate performance and stock price. The managerial labor market can also help align behavior, as competition for top talent can force companies to offer compensation packages that align with stockholder goals. An independent board of directors can provide oversight and hold management accountable for their actions, ensuring they are working in the best interest 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 to Align the Behavior