what are other mechanisms which can be used to ensure that managers act in the best interest of the stakeholders?

In addition to strict monitoring of managers that they act in the best interest of the shareholders,what are other mechanisms?

Asked by: mantu 447 days ago - 1 Answers - 2783 views

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It depends on who the stake holders are – stockholders, debtors, employees, etc. In the case of stockholders, you can tie management’s payment to stock performance. This can be done in the performance of stock options, or add certain parameters to their department’s goals that will enact certain bonuses and stock options.
One thing to watch out for is manipulation of the stock price. If compensation is too closely tied to stock price, incentive exists to let greed takeover and inflate performance. Good in short term, very bad in the long run.

Answer by Rick 446 days ago

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