which of the following actions would be likely to encourage a firms managers to make decisions that are in…

which of the following actions would be likely to encourage a firms managers to make decisions that are in the best interests of shareholders?\nthe percentage of executive compensation that comes in the form of cash is increased and the percentage coming from long - term stock options is reduced.\nthe state legislature passes a law that makes it more difficult to successfully complete a hostile takeover.\nthe percentage of the firms stock that is held by institutional investors such as mutual funds, pension funds, and hedge funds rather than by small individual investors rises from 10% to 80%.\nthe firms founder, who is also president and chairman of the board, sells 90% of her shares.\nthe firms board of directors gives the firms managers greater freedom to take whatever actions they think best without obtaining board approval.

which of the following actions would be likely to encourage a firms managers to make decisions that are in the best interests of shareholders?\nthe percentage of executive compensation that comes in the form of cash is increased and the percentage coming from long - term stock options is reduced.\nthe state legislature passes a law that makes it more difficult to successfully complete a hostile takeover.\nthe percentage of the firms stock that is held by institutional investors such as mutual funds, pension funds, and hedge funds rather than by small individual investors rises from 10% to 80%.\nthe firms founder, who is also president and chairman of the board, sells 90% of her shares.\nthe firms board of directors gives the firms managers greater freedom to take whatever actions they think best without obtaining board approval.

Answer

Brief Explanations:

When institutional investors hold a larger percentage of a firm's stock, they have more incentive to monitor managers. Their goal is to maximize the value of their investment, which aligns with shareholders' best - interests. Cash - based executive compensation may lead to short - term focus, laws against hostile takeovers reduce market discipline, founder selling shares may signal lack of confidence, and giving managers more independent power without board approval may lead to self - serving actions.

Answer:

The percentage of the firm's stock that is held by institutional investors such as mutual funds, pension funds, and hedge funds rather than by small individual investors rises from 10% to 80%.