Which of the Following Is True with Respect to Earnings

question 4

Multiple Choice

Which of the following is true with respect to earnings guidance?

• A)There is usually a change in total returns to shareholders in the first year that managers begin to offer earnings guidance.
• B)It has been proven that earnings guidance can increase liquidity.
• C)Firms that engage in earnings guidance have higher multiples such as enterprise value/EBITA.
• D)When a company begins to issue earnings guidance,it does not change the likelihood of higher or lower volatility in its share price relative to companies that do not issue earnings guidance.

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Definitions:

Goal Congruence

Goal congruence refers to the alignment of objectives among different members or parts of an organization, ensuring that all efforts contribute towards the overarching goals.

Gainsharing

A performance-based compensation strategy where employees receive benefits from cost-saving measures or productivity increases.

Cash Bonuses

Additional compensation awarded to employees as a one-time payment for achieving specific performance targets or for special recognition.

Performance Target

A specific goal set for a business, department, team, or individual to achieve within a particular time frame, aimed at improving performance.