A Combination of Well-Designed Management Compensation Contracts,the Market for Corporate

question 54

Multiple Choice

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

• A) not be necessary as any one of these methods will control a manager's actions.
• B) ensure that managers only act in their own self-interest.
• C) mean that, on average, managers work in the best interests of owners.
• D) remove any monitoring and bonding costs required under PAT.

---

Definitions:

Cohort Effects

Differences among people that stem from being born at different times or periods, leading to distinctive formative experiences.

Intelligence Tests

Standardized tools designed to measure a person's cognitive abilities and intellectual potential.

Testing Bias

A flaw in the design, administration, or interpretation of tests that results in systematically unfair outcomes or assessments for certain groups of people.

Fluid Intelligence

The capacity to solve novel problems, reason abstractly, and identify patterns, without relying on existing knowledge.