If a firm's board of directors wants to maximize value for its stockholders in general (as opposed to some specific stockholders), it should design an executive compensation system whose goal is to maximize the stock's intrinsic value rather than the stock's current market price.

Question

Quizplus · Accepted Answer

Maximizing the stock's intrinsic value would ultimately lead to long-term value for all stockholders, as opposed to just focusing on short-term market price fluctuations.

If a Firm's Board of Directors Wants to Maximize Value