One of the ways in which firms can mitigate or reduce potential conflicts between bondholders and stockholders is by increasing the amount of debt in the firm's capital structure. qquadThe threat of takeover generally increases potential conflicts between stockholders and managers. qquadManagerial compensation plans cannot be used to reduce potential conflicts between stockholders and managers. qquadThe threat of takeovers tends to reduce potential conflicts between stockholders and managers. qquadThe creation of the Securities and Exchange Commission $($SEC$)$ has eliminated conflicts between managers and stockholders.