Which of the following statements is correct? Managers may operate in the stockholders' best interests, but they may also operate in their own personal best interests. As long as managers stay within the law, there simply are not any effective controls that stockholders can implement to affect managerial a.decision making. Given the multi-owner nature of most large corporations, the agency costs associated with perquisite consumption are not really b. a problem. The potential for agency problems is greatest when individual stockholders own extremely small proportions of the companies c. and managers have little, if any, of their own wealth tied up in these companies. d. Managers rule out any potential conflicts of interest with the shareholders by selling the firm's stock to outsiders. An agency relationship exists when one or more persons hire another person to perform some service but withhold decision- e.making authority from that person.

Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
icon
Related questions
Question

Which of the following statements is correct?

Managers may operate in the stockholders' best interests, but they may also operate in their own personal best interests. As long as managers stay within the law, there simply are not any effective controls that stockholders can implement to affect managerial

a.decision making.

Given the multi-owner nature of most large corporations, the agency costs associated with perquisite consumption are not really

b. a problem.

The potential for agency problems is greatest when individual stockholders own extremely small proportions of the companies

 

c. and managers have little, if any, of their own wealth tied up in these companies.

 

d. Managers rule out any potential conflicts of interest with the shareholders by selling the firm's stock to outsiders. An agency relationship exists when one or more persons hire another person to perform some service but withhold decision-

e.making authority from that person.

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

Blurred answer
Similar questions
Recommended textbooks for you
Understanding Business
Understanding Business
Management
ISBN:
9781259929434
Author:
William Nickels
Publisher:
McGraw-Hill Education
Management (14th Edition)
Management (14th Edition)
Management
ISBN:
9780134527604
Author:
Stephen P. Robbins, Mary A. Coulter
Publisher:
PEARSON
Spreadsheet Modeling & Decision Analysis: A Pract…
Spreadsheet Modeling & Decision Analysis: A Pract…
Management
ISBN:
9781305947412
Author:
Cliff Ragsdale
Publisher:
Cengage Learning
Management Information Systems: Managing The Digi…
Management Information Systems: Managing The Digi…
Management
ISBN:
9780135191798
Author:
Kenneth C. Laudon, Jane P. Laudon
Publisher:
PEARSON
Business Essentials (12th Edition) (What's New in…
Business Essentials (12th Edition) (What's New in…
Management
ISBN:
9780134728391
Author:
Ronald J. Ebert, Ricky W. Griffin
Publisher:
PEARSON
Fundamentals of Management (10th Edition)
Fundamentals of Management (10th Edition)
Management
ISBN:
9780134237473
Author:
Stephen P. Robbins, Mary A. Coulter, David A. De Cenzo
Publisher:
PEARSON