ESSAY : Identify an incentive conflict in your firm, or one you have read about, that reduced firm value.

Identify an incentive conflict in your firm, or one you have read about, that reduced firm value. As part of your answer, discuss whether or not one or more of the legs of the organizational stool was unbalanced, and if so, how that contributed to the conflict.

SAMPLE SOLUTION

Any organization is made up of the shareholders, executive, workers, labor unions, consumers, and suppliers (Brickley, Smith & Zimmerman, 2016). Each of these parties engages in a certain form of contract with the company but often pursue objectives that are beneficial to them. If an incentive decision leads to a disagreement between the organization and one of the stakeholders, an incentive conflict arises.
Brickley et al. (2016) stated that incentive conflicts between parties in an organization are bound to arise because individuals are inventive maximizers of their…