The principle of finance that "management objectives may differ from owner objectives" can be resolved by increasing manager salaries.

Question

Quizplus · Accepted Answer

Increasing manager salaries may incentivize them to align their objectives with those of the owners, but it does not guarantee that their objectives will necessarily be the same. Additionally, there may be other factors at play, such as differing risk preferences or time horizons, that make it difficult to fully align owner and manager objectives. Other solutions may include explicit contracts, monitoring mechanisms, or corporate governance structures.

The Principle of Finance That "Management Objectives May Differ from Owner