In markets-oriented systems, handling of the manager-stockholder conflict in large firms is through
A) rating agencies.
B) the potential for takeovers.
C) management ownership of the firm.
D) bank ownership of the firm.

Question

Quizplus · Accepted Answer

In markets-oriented systems, the manager-stockholder conflict in large firms is handled through the potential for takeovers. This means that if managers fail to act in the best interest of the shareholders, then the firm can be taken over by another company that will potentially improve the company's performance and value for its shareholders. This serves as a powerful incentive for management to act in the best interests of shareholders, as their job security and future career prospects can be at risk otherwise. The other options - rating agencies, management ownership of the firm, and bank ownership of the firm - may have some impact on the manager-stockholder conflict, but the potential for takeovers is the most impactful in markets-oriented systems.

In Markets-Oriented Systems, Handling of the Manager-Stockholder Conflict in Large