Should society worry that executives would unduly enrich

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a. Should society worry that executives would unduly enrich themselves, or can society rely on the entrepreneurs' incentives to write corporate charters that prevent this? Under what circumstances does either of these two perspectives seem more powerful?

b. In the example in Section 24.1D, the manager of a $60 million firm takes a $30 million project that costs $50 million, just because it produces $10 million in managerial perks. Let's presume this project produces no perks, but managerial compensation is 1% of firm size, every year. This means, for example, that the manager earns $600,000 without the project. Would the manager still want to take this project?

Reference no: EM131243193

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