Critical Evaluation

Critical Evaluation

Introduction

Management possession would possibly scale back the conflict of interests between managers and stockholders. Many studies have supported the argument that executive compensation plans will motivate executives to boost firm performance and maintaining profit. This paper examines whether or not the compensation of executives through stock choices influences the firm's restructuring or liquidation selections.

Discussion

The separation of possession and operation in a very corporation with diffuse possession, a self-interested manager has incentive to maximize his or her own profit at the expense of out of doors shareholders. This divergence of interests creates conflict between principals (shareholders) and agents (managers). From ...