Question

Managers always attempt to maximize the long-run value of their firms' stocks, or the stocks' intrinsic values. This is exactly what stockholders desire. Thus, conflicts between stockholders and managers are not possible.

1. True2. False

Answer 1

The correct answer is number (2): False.

Step-by-step explanation:

Conflicts between stakeholders and managers are common in the corporate world. Those issues take the name of principal-agent problems. The principal-agent problem arises when a principal (shareholder) employs an agent (manager) to perform duties that conflict with the agent's best interest.

Answer 2

1

Step-by-step explanation:

True