Final answer:
Managers in large companies have incentives to maximize share value because it aligns with the interests of the shareholders. They may receive stock options, bonuses, and rewards tied to share performance, while also benefiting from career advancement opportunities.
Step-by-step explanation:
Managers in large companies have incentives to maximize share value because it aligns with the interests of the shareholders, who are the owners of the company. When managers maximize the share value, they increase the wealth of the shareholders and satisfy their financial goals. This can be achieved by making strategic decisions that improve the company's profitability, increase market share, and enhance overall performance.
One incentive for managers is stock options or equity-based compensation, which gives them the opportunity to purchase company shares at a predetermined price. If they can increase the share value, they can profit from selling those shares at a higher price in the future. Additionally, managers may receive bonuses or performance-based rewards tied to the company's share performance. These incentives encourage managers to make decisions that will positively impact share value.
Another incentive is reputation and career advancement. Successful managers who consistently maximize share value are highly regarded in the business world, and their accomplishments can lead to promotions or opportunities to work for even larger companies. By achieving strong financial performance, managers can enhance their own professional reputation and future prospects.