The Widespread Use of Accounting-Based Incentives to Determine Executive Compensation

question 50

Multiple Choice

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.

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Definitions:

Verbal/Symbolic

Relating to the use of words or symbols to communicate thoughts, ideas, or emotions.

Imaginal

Imaginal pertains to the use of imagination or visualization techniques, often employed in therapeutic settings to explore scenarios or rehearse coping strategies.

Covert Self-reinforcement

A psychological technique in which individuals reward themselves in subtle, often non-materialistic ways, to positively reinforce their own behavior.

Overt Self-reinforcement

A process in which an individual openly rewards themselves for a behavior, aiming to increase the likelihood of its recurrence.