When Managers' Compensation Plans Are Tied in a Meaningful Manner

question 45

Multiple Choice

When managers' compensation plans are tied in a meaningful manner to the profits of the firm, agency problems:

• A) can be reduced.
• B) will be created.
• C) are shifted to other stakeholders.
• D)are eliminated entirely from the firm.

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Definitions:

Furtherance

The act of promoting or advancing a cause, interest, or plan.

Governing Professionals

Individuals or bodies responsible for making and enforcing rules and standards within specific professions to ensure accountability and integrity.

Professions

Occupations requiring specialized knowledge and often long and intensive academic preparation.

Role Trust

The confidence in and reliance on individuals or groups to perform their functions or roles effectively and responsibly, particularly in professional settings.