The Problem with Tying Executive Pay to Stock Prices Is

question 39

Multiple Choice

The problem with tying executive pay to stock prices is that:

• A) many factors other than executive effort and ability affect stock prices.
• B) executives can manipulate stock prices.
• C) stock price does not reflect firm performance.
• D) executives prefer more straightforward compensation schemes that reduce their risk.

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Definitions:

Antitrust Laws

Laws designed to protect trade and commerce from abusive practices such as monopolies, price fixing, and other unfair business practices.

Oligopolistic Structure

A market structure characterized by a small number of large firms dominating the market, often leading to limited competition.

Intent To Monopolize

A legal concept referring to actions or strategies by a company designed to achieve, maintain or extend monopoly power, often scrutinized under antitrust laws.

Sherman Act

The Sherman Act is a landmark federal statute in the field of United States antitrust law passed in 1890, which prohibits monopolistic practices and promotes competition.