If you were asked to recommend actions that would help to solve the conflict of interest problems between owners and managers in public corporations, which of the following would not be part of your recommendation?

Question

a. Support the efforts of whistleblowers to expose corporate wrongdoing.
b. Tie executive compensation to long-term corporate performance.
c. Issue restricted stock, rather than ordinary stock, as executive compensation.
d. Increase the number of outside directors on the board.
e. Hire the company auditors to perform significant non-auditing services.

Answer 1

The action that would not be part of the recommendation to solve the conflict of interest problems between owners and managers in public corporations is:

e. Hire the company auditors to perform significant non-auditing services.

This option is problematic because having the same auditors perform significant non-auditing services can create conflicts of interest and compromise the independence of the audit, which is crucial for ensuring transparency and accountability in a corporation. The other options (a through d) focus on aligning the interests of owners and managers in a more effective way.