Management of a limited liability company is appointed to promote and protect shareholders’ interest in the
performance of their functions. The aim is to maximise shareholders’value. The management, however, could have
interest that might be in conflict with shareholders’ interest.
Required:
In reference to the above statement:
(i) Identify this type of conflict in modern day financial management of a firm.
(ii) Explain THREE factors that could contribute to the conflict identified in (a) (i) above.
(iii) As a financial management professional, explain FOUR strategies that could be used to manage or mitigate
this conflict to protect shareholders.
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