question 8 (2.5 points) listen which of the following actions would be most likely to reduce potential…

question 8 (2.5 points) listen which of the following actions would be most likely to reduce potential conflicts of interest between stockholders and managers? pay managers large cash salaries and give them no stock options. change the corporations formal documents to make it easier for outside investors to acquire a controlling interest in the firm through a hostile takeover. beef up the restrictive covenants in the firms debt agreements. eliminate a requirement that members of the board of directors must hold a high percentage of their personal wealth in the firms stock. for a firm that compensates managers with stock options, reduce the time before options are vested, i.e., the time before options can be exercised and the shares that are received can be sold. question 9 (2.5 points) listen

question 8 (2.5 points) listen which of the following actions would be most likely to reduce potential conflicts of interest between stockholders and managers? pay managers large cash salaries and give them no stock options. change the corporations formal documents to make it easier for outside investors to acquire a controlling interest in the firm through a hostile takeover. beef up the restrictive covenants in the firms debt agreements. eliminate a requirement that members of the board of directors must hold a high percentage of their personal wealth in the firms stock. for a firm that compensates managers with stock options, reduce the time before options are vested, i.e., the time before options can be exercised and the shares that are received can be sold. question 9 (2.5 points) listen

Answer

Brief Explanations:

When managers are compensated with stock - options and there are longer vesting periods and restrictions on selling the received shares, their interests become more aligned with those of stockholders. They have an incentive to work towards increasing the long - term value of the firm's stock. High cash salaries without stock options may not align interests well. Making it easier for outside investors to take over through changes in corporate documents can create uncertainty and may not reduce conflicts. Relaxing debt covenants may not address the manager - stockholder conflict. Requiring board members to hold stock doesn't directly target the manager - stockholder conflict as effectively as stock - option vesting for managers.

Answer:

For a firm that compensates managers with stock options, reduce the time before options are vested, i.e., the time before options can be exercised and the shares that are received can be sold.