Question

List the actions would be most likely to reduce potential conflicts of interest between stockholders and managers?

Answer 1

To reduce potential conflicts of interest between stockholders and managers, actions like transparency and disclosure, independent board of directors, performance-based incentives, and shareholder engagement can be taken.

Step-by-step explanation:

To reduce potential conflicts of interest between stockholders and managers, several actions can be taken:

1. Transparency and Disclosure: Companies should provide clear and accurate information about their financial performance, executive compensation, and potential conflicts of interest to shareholders.
2. Independent Board of Directors: Having a majority of independent directors on the board can help ensure that decisions are made in the best interest of shareholders and not just the managers.
3. Performance-Based Incentives: Executive compensation structures can be tied to company performance to align the interests of managers with shareholders.
4. Shareholder Engagement: Actively engaging with shareholders and soliciting their opinions can help identify potential conflicts of interest and address them.