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Management may be tempted to make decisions that benefit themselves rather than the shareholders they represent....

Management may be tempted to make decisions that benefit themselves rather than the shareholders they represent. Management compensation, however, can be structured to better align management decisions with shareholder interests.

True

False

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Answer #1

the statement "Management may be tempted to make decisions that benefit themselves rather than the shareholders they represent. Management compensation, however, can be structured to better align management decisions with shareholder interests."

is TRUE

the goal of financial management is wealth maximisation of shareholders , but sometimes managers tend to make decisions that benefit them more than the shareholders , this is why the compensation structure is used to align the interests of managers with the interests of shareholders , for example ESOPs ( employee stock option plans)

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