Which of the following statements is CORRECT?

A.The threat of takeover generally increases potential conflicts between stockholders and managers.

B.The threat of takeovers tends to reduce potential conflicts between stockholders and managers.

C.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 capital structure.

D.Managerial compensation plans cannot be used to reduce potential conflicts between stockholders and managers.