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Self Interests of Management Conflict

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Do you think the self interests of management conflict with the interests of shareholders? Does this type of conflict ever increase or decrease the performance of a corporation? Discuss how performance may be increased or decreased.

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Yes, self interest of management can conflict with the interest of shareholders due to some factors listed below:

1. Performance incentive of management: If performance incentive of management is such that their interest (read wealth creation) has more priority over interest of shareholders then this can lead to issues. For instance if bonus is linked to business targets and not to overall company profitability then you can have a situation where people of business group taking hefty bonuses despite poor ...

Solution Summary

The solution discusses the self interests of management conflict with the interests of shareholders.

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