Which of the Following Factors Explains Why Managers of Government

question 192

Multiple Choice

Which of the following factors explains why managers of government agencies (the public sector) have little incentive to operate efficiently?

• A) It is relatively easy for voters to detect operational inefficiency in the public sector and do something to correct it.
• B) Public-sector managers face fierce competition.
• C) Public-sector managers have no fear of losses and bankruptcy when operational efficiency is not achieved.
• D) All of the above explain why government agencies have little incentive to be efficient.

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Definitions:

Low Dividend Payouts

A company strategy of distributing relatively small portions of earnings to shareholders as dividends.

NPV Projects

Projects evaluated based on the Net Present Value method, which calculates the difference between the present value of cash inflows and outflows to determine profitability.

Flotation Costs

The total costs incurred by a company in issuing new securities, including underwriting, legal, and registration fees.

Information Content Effect

Refers to the impact that news or information released by a company may have on its stock price, indicating the market's reaction to new data.