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A combination of well-designed management compensation contracts, the market for corporate takeovers and a well-informed labour...

A combination of well-designed management compensation contracts, the market for corporate takeovers and a well-informed labour market should:

not be necessary as any one of these methods will control a manager's actions.

ensure that managers only act in their own self-interest.

mean that, on average, managers work in the best interests of owners.

remove any monitoring and bonding costs required under PAT.
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Answer #1

A combination of well-designed management compensation contracts, the market for corporate takeovers and a well-informed labour market will make information be easily and systematically available to all the stakeholders including shareholder, lenders, supplier, employees so that they can know whether managers acting in the best interest of just not the owners but all the stakeholders.

If the information is systematic and easily available then it will remove the monitoring and bonding costs associating with evaluating the actions / decision of managers.  

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