How do firms assure managers act in best interest of stockholders?

Firms align managers' interests with those of stockholders through various mechanisms, such as performance-based compensation, which includes bonuses and stock options tied to the company's financial performance. Additionally, corporate governance practices, such as the establishment of independent boards and regular performance evaluations, help ensure accountability. Furthermore, transparency in reporting and shareholder engagement can also encourage managers to prioritize stockholder interests. These strategies collectively foster a culture of responsibility and alignment within the organization.