Question

Under the _____________, both internal and external corporate governance mechanisms are intended toinduce managerial actions that maximize profit and shareholder value.
(A)
Shareholder theory.
(B)
Agency theory.
(C)
Corporate governance theory
(D)
None of above

Answer 1

Answer:

A) Shareholder theory is the right answer

Answer 2

The theory is the Shareholder theory.

• It is an important perspective of a firm's role in society promoting concept where managers' main obligation is to serve shareholders' interests.
• This is done by the best they can, utilizing the firm's resources to grow the latter's wealth by pursuing profits.
• Internal governance mechanisms involve boards of directors, ownership and control, and management incentive systems,
• Whereas external governance mechanisms are concerned with the external market as well as the rules and regulations that are used in this approach.