Asked by Fatima Zahra on May 22, 2024
Verified
The widespread use of accounting-based incentives to determine executive compensation is controversial for which one of the following reasons?
A) Earnings growth automatically increases shareholder value.
B) Accounting based incentive plans can encourage managers to adopt a long-term business focus.
C) Executives can use their discretion over the accounting policies.
D) Managers do not have accounting flexibility.
Accounting-Based Incentives
Compensation schemes for employees or executives that are tied to accounting performance measures, such as earnings or return on assets.
Executive Compensation
The total remuneration package provided to executives, including salary, bonuses, shares, options, and other benefits.
Discretion Over
Having the authority to make decisions and judgments in certain situations without the need for specific authorization.
- Comprehend the difficulties and debates related to incentives based on accounting in managerial remuneration.
Verified Answer
Learning Objectives
- Comprehend the difficulties and debates related to incentives based on accounting in managerial remuneration.
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