Because monitoring is not perfect, managers compensation plans must be designed provide them incentives to:
A) put in a lot of effort
B) work long hours
C) take actions that make employees happy
D) maximize the value of the firm to the shareholders

Question

Quizplus · Accepted Answer

The main goal of a manager should be to maximize the value of the firm to the shareholders. This aligns the manager's interests with those of the company's owners and promotes long-term success. While effort and employee satisfaction are important, they may not necessarily lead to the best outcomes for the company if they do not directly contribute to increasing shareholder value. Working long hours may also lead to burnout and a decrease in performance.

Because Monitoring Is Not Perfect, Managers Compensation Plans Must Be