Managers often are motivated to pursue diversification to in…
Managers often are motivated to pursue diversification to increase firm size, make it difficult for outsiders to evaluate managers’ performance, and reduce the firm’s exposure to unfavorable environmental shifts in any given market. As a result, in the short-term, product diversification can increase overhead, often reduces managerial employment risk, and may increase managerial compensation. From the shareholders’ perspective, such motives usually are __________.