Do you think companies should force executives to own shares in the company? This may lead to an almost perfect match and interdependence between the directors and the shareholders, but do not forget that the executives already have their personal wealth (i

Finance Dec 19, 2020

Do you think companies should force executives to own shares in the company? This may lead to an almost perfect match and interdependence between the directors and the shareholders, but do not forget that the executives already have their personal wealth (i.e., the salary) in the company.

Expert Solution

I think anything forced upon will not bear any positive results. It will be better if the executives are given a choice and not an obligation to buy the shares of the company.

I do not completely agree with the second statement because it might happen that the company might give shares with different class than that of the common shareholders in order to entice them. If that happens then there will not be any kind of match or interdependence.

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