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.

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Definitions:

Financial Statement

Summarized reports that convey the financial status, performance, and cash flows of a business or individual over a specific period.

Permanent/Temporary

Categories that describe the expected tenure or duration of a job, position, or assignment, denoting whether it is expected to last indefinitely (permanent) or for a limited time period (temporary).

Normal Balance

The typical side (debit or credit) on which an account increases, depending on its type (asset, liability, equity, revenue, or expense).

Financial Statement

Reports that provide detailed information about a company's financial performance and position, including income statements, balance sheets, and statements of cash flows.