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Question:

Which of the following is most likely to create an incentive for senior managers to act in the best interests of shareholders?

A The threat of a hostile takeover.
explanation

The threat of a hostile takeover, one in which senior managers are replaced, can act as a strong incentive for senior managers to act in shareholders' interests by growing the value of the company's equity shares. Companies where management has followed their own interests rather than those of shareholders can show slow growth and low return on assets and attract an outside buyer who hopes to profit from improving company operations and strategy.