There is a conflict of interest between stockholders and managers. In theory, stockholders are expected to exercise control over managers through the annual meeting or the board of directors. a) In theory, how is the mechanism supposed to work? (5 marks). b) In practice, why might these disciplinary mechanisms not work? (5 marks) c) There are some corporate strategists who have suggested that firms focus on maximizing market share rather than maximizing the share price (stocks' market price). Explain when might this strategy work and when might it fail? (5 marks) Marking scheme: 5 marks for clearly explaining a): how the mechanism is theoretically supposed to work 5 marks for clearly explaining b): why the mechanism might not work 5 marks for clearly explaining situations when maximizing the market share might work and when it might fail