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. However, there can be conflicts between stockholders
and bondholders.
A) True
B) False

Answer 1

Conflicts between stockholders and managers are possible.

Step-by-step explanation:

The statement that conflicts between stockholders and managers are not possible is False. This is because managers may prioritize their own interests or make decisions that do not align with the long-term value of the firm. Stockholders, on the other hand, want the value of their stocks to increase over time. Conflicts between stockholders and managers can arise when managers prioritize short-term gains or engage in unethical behavior that harms the long-run value of the firm.