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Discuss why a firm's stockholders may be more likely to want to pursue a risky but...

Discuss why a firm's stockholders may be more likely to want to pursue a risky but potentially very profitable investment while the same firm's managers may be less likely to want to pursue this project.

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Shareholder are real owner of company and they always wants to increase their wealth that is possible only when stock price of company rises significantly. the stock price of company rises when company undertake potentially very profitable investment, so that earnings of company increase and their stock price also. to achieve this goal firm's stockholders may be more likely to want to pursue a risky but potentially very profitable investment

At same time of manager of company may be less likely to want to pursue risky investment. this is because if in any case the project will not be successful then all blame of unsuccess come of managers and they might lost their job. also, a risky investment takes lots of research, analysis and lots of work that manager does not wants to do.

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