Which one of the following statements is TRUE?
A) A manager avoiding a positive NPV but risky project is an example of a manager-shareholder conflict.
B) Management is said to be entrenched when the company is doing badly and is "stuck in a rut."
C) A quarter-end bonus is an example of a nonpecuniary benefit.
D) A company's matching contribution to a retirement plan is a nonpecuniary benefit.
E) Company sponsorship of a local charity is an example of a nonpecuniary benefit.

Question

Quizplus · Accepted Answer

A manager avoiding a positive NPV (Net Present Value) but risky project is an example of a manager-shareholder conflict because it shows a divergence in risk preferences between managers (who may avoid risk to protect their jobs) and shareholders (who may prefer the risk if it increases value).

Which One of the Following Statements Is TRUE