Question

Which of the following statements offers the best means of reducing a conflict of interest between management and shareholders of a corporation? Group of answer choices

A.Reducing the amount of company information available to shareholders so that they are not overloaded with too much material to read

B. Organising management’s compensation to consist of a salary only

C. Government making takeover laws tighter to reduce the threat of takeovers

D. Offering management shares in the company as part of their compensation package

Answer 1

D. Offering management shares in the company as part of their compensation package

Offering the management shares in the company will make the management think from a shareholder point of view too, as against if only given a salary or performance linked compensation, in which they would only think of taking on more risk for bonuses. A is incorrect as shareholders need to know the company wrll. B is incorrect as this will make management indifferent to the shareholders. C is incorrect as this would not solve the conflict.