Where Management's Bonuses Are Tied to Profit-Based Performance Measures Management

question 67

Multiple Choice

Where management's bonuses are tied to profit-based performance measures management may have an incentive not to revalue assets because:

• A) When revaluing assets, the value of the asset base increases, consequently the return on assets will fall.
• B) A revaluation may result in a decrease in the value of the asset base.
• C) A revaluation that increases the value of the asset base will increase profit measures.
• D) When revaluing assets, the value of the asset base increases, consequently the debt to equity ratio will fall.

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Definitions:

Strikes

Work stoppages initiated by employees as a form of protest, typically in an effort to gain better pay or working conditions.

Unionization Rate

The percentage of the workforce that is a member of a union, indicating the level of union presence within the labor market.

Major Strikes

Significant work stoppages initiated by employees to protest against employment conditions, policies, or decisions.

Collective Bargaining

Collective bargaining is the negotiation process between employers and a group of employees aimed at reaching agreements that regulate working conditions.