KASNEB CIFA Foundation Practice Questions - KASNEB Certified Investment And Financial Analysts (CIFA) - Foundation Level Exam

Under agency theory, which mechanism MOST directly aligns manager interests with shareholder wealth maximization?

Equity-based executive compensation tied to long-term performance Unlimited managerial discretion without board oversight Fixed salary with no performance linkage Perquisites that increase managerial consumption

Correct Answer:

Equity-based executive compensation tied to long-term performance

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