An action that is most likely to decrease potential conflicts of interest between principals and agents is:

- Congress passes a law that strongly restricts hostile takeovers.

- The composition of the board of directors is changed from all inside directors to all outside directors, and the directors are compensated with stocks instead of cash.

- The company's outside auditing firm is given a lucrative yearly consulting contract with the company.

- A firm's compensation system is changed so that managers receive larger cash salaries but fewer long-term options to buy back.