question 10 (2.5 points)\nlisten\nwhich of the following actions would be likely to encourage a firms…

question 10 (2.5 points)\nlisten\nwhich 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

question 10 (2.5 points)\nlisten\nwhich 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:

Increasing long - term stock options in executive compensation aligns managers' interests with shareholders as it ties managers' rewards to long - term company performance. Making hostile takeovers more difficult reduces external pressure on managers to act in shareholders' interests. Higher institutional ownership can lead to more active monitoring. A founder selling shares may reduce alignment. Giving managers unrestricted freedom may not ensure they act in shareholders' best interests. The option that increases long - term stock options in executive compensation aligns interests better.

Answer:

None of the above options are correct. A more appropriate action would be to increase the percentage of executive compensation coming from long - term stock options and reduce the cash - based portion.