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:

Postpurchase Cognitive Dissonance

The feeling of doubt or anxiety experienced by a consumer after making a significant purchase, often leading to second-guessing the decision.

Expensive

Characterized by high price or considerable cost, typically in relation to the value or perceived value of an item or service.

Infrequently Purchased

Items or services bought rarely, often due to high cost, long lifespan, or less frequent need.

Reference Groups

Social groups that individuals compare themselves to for guidance in developing their own attitudes, values, and behaviors.