Sassafras Corp. has had to issue four profit warnings in the last six months and has seen a 28 percent drop in the price of its stock over the last two years. One of the problems in the past was that Sassafras got too large. Some management changes have been made, some businesses have been divested, and things are starting to get back on track for the company. What can be done to prevent value-reducing diversification in the future? Compensation mechanisms can be adopted. Governance mechanisms can be put in place. Diversification rules can be proscribed. Managerial risk can be defined