The Widespread Use of Accounting-Based Incentives for Executive Compensation Is

question 89

Multiple Choice

The widespread use of accounting-based incentives for executive compensation is controversial for which one of the following reasons?

• A)Earnings growth does not automatically increase shareholder value.
• B)Accounting-based incentive plans can encourage managers to adopt a long-term business focus.
• C)Executives cannot use their discretion over the accounting policies.
• D)Managers do not have accounting flexibility.

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Definitions:

Gestalt

A psychological theory that proposes objects are viewed holistically rather than as a collection of individual parts, emphasizing the mind's innate tendency to organize perceptions.

Phenomenon

an observable event or fact, particularly extraordinary or remarkable, that can be scientifically described or explained.

Phi Phenomenon

The optical illusion of perceiving continuous motion between separate objects viewed in rapid succession.

Gestalt Psychology

A psychological approach that emphasizes the holistic and intrinsic properties of the mind's perception of the world, suggesting that the whole of anything is greater than its parts.