During the 1990s, Rapidly Increasing Stock Prices Exposed a Flaw

question 26

Multiple Choice

During the 1990s, rapidly increasing stock prices exposed a flaw in the shareholder wealth maximization model, the seeking of short-term value maximization. Such behavior by management is characterized by all but which of the following?

• A) a focus on quarterly earnings
• B) overly generous use of stock options to motivate management
• C) improper reporting of earnings by management
• D) All of the above may be characteristics of short-term value maximization.

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Definitions:

Ratio Scale

A scale where there is a true zero point, allowing for the measurement of ratios between data points.

Proportion

A statistical measure expressing the fraction of a quantity within a whole.

Sample

A subset of a population selected for measurement, observation, or questioning to provide statistical information about the population.

Sample

A group of people or objects chosen from a broader group to conduct statistical studies.