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suhaialston · Sep 13, 2009, 11:05 PM

"Management and owners generally agree on investment decisions because both are acting in the best interest of the company." which one is the correct statement?

Management and owners might disagree on investment decisions because management is more concerned with long term effects.

Management and owners might disagree because owners often seek out a less expensive investment.

Owners are more concerned with job loss that results from an unsuccessful investment, and this might cause debate over investments.

A common goal of owners is to show that they have the resources to buy smaller companies; this type of investment does not benefit management and is a source of disagreement.

suhaialston · Sep 13, 2009, 11:11 PM

I think that the correct statement is:

Owners are more concerned with job loss that results from an unsuccessful investment, and this might cause debate over investments.

morgaine300 · Sep 13, 2009, 11:12 PM

Please see the guidelines for posting homework questions:
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This also means I suspect your other question about doing loans was also homework. (I did wonder why you'd be involved in a decision to make a loan.)

morgaine300 · Sep 13, 2009, 11:13 PM

Oops - posted at the same time. :-)

ArcSine · Sep 14, 2009, 04:12 AM

I'm inclined to agree with your choice, Suhaialston, although the second answer also has some merit. One of the classic problems in owner - management conflict is the tendency of mgmt to "empire build". In that light, the second answer might be interpreted as "managers sometimes push for larger (more expensive) investments and projects."

But don't abandon your choice too quickly, though. Google "agency costs", which is the name given the theoretical study of owner - management conflicts. You'll find some discussions that might help you out.

Best of luck with it!