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Some managers are known to prefer to enjoy the quiet life, while indulging perks given to CEOs. For example, more than half of Fortune 100
Some managers are known to prefer to enjoy the quiet life, while indulging perks given to CEOs. For example, more than half of Fortune 100 executives can use the company jet for their personal use or to bring their spouses, friends or families along on a business trip with them. Which of the following is true for managers with such preference? Managers may take negative NPV projects to enlarge his influence of an individual or organization's power. On a larger scale, it may lead to acquisitions or other decisions that do not ultimately benefit shareholders, increase the corporation's financial health, or bolster the company's long-term viability. Increasing market share, buying power, or deal-making influence are all elements to empire building. It may lead to decline in overall productivity and profitability as such managers are reluctant to work hard and do not take positive NPV projects. It could be due to the large ownership of CEO that create moral hazard because managers bear significant portion of financial costs if they pursue their own goals rather than maximize shareholder wealth
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