Final answer:
Managers in large companies have incentives to maximize share value through stock options, performance-based bonuses, and career advancement.
Step-by-step explanation:
Managers in large companies have incentives to maximize share value for several reasons:
- Stock options: Managers often receive stock options as part of their compensation package. These options give them the right to purchase company stock at a predetermined price in the future. By maximizing share value, managers can benefit from a higher stock price and potentially make a profit when they exercise their options.
- Performance-based bonuses: Many managers are eligible for performance-based bonuses tied to the company's financial performance. Maximizing share value can lead to higher profits, which can increase the likelihood of receiving a larger bonus.
- Career advancement: Managers who are successful in maximizing share value are often rewarded with promotions and opportunities for career advancement. This can include being considered for higher-level positions within the company or even being recruited by other companies seeking experienced managers.
Overall, managers in large companies have strong incentives to maximize share value as it can directly impact their personal financial gain, career prospects, and reputation as effective leaders.