A Major Conflict of Interest Between Top Executives and Owners

Multiple Choice

A major conflict of interest between top executives and owners is that top executives wish to diversify the firm in order to __________, whereas owners wish to diversify the firm in order to __________.

A) generate free cash flows; reduce the risk of total firm failure
B) increase the price of the firm's stock; increase the dividends paid out from free cash flows
C) reduce the risk of total firm failure; reduce their total portfolio risk
D) reduce their employment risk; increase the company's value