If Performance Measures Are Perfect Proxies for Organizational Goals

question 78

Multiple Choice

If performance measures are perfect proxies for organizational goals,

• A)sub-optimization will be enhanced.
• B)sub-unit managers will strive to achieve organizational goals.
• C)sub-units can all be decentralized.
• D)residual income will rise.

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Definitions:

Par Value

The stated value of a financial security, such as a bond or stock, as declared by the issuer.

Preferred Stock

A type of equity security that has a priority claim on a company's assets and earnings before common stock, usually with fixed dividends and no voting rights.

Paid-In Capital Excess

The amount of equity a company generates that is above the par value of its shares, often arising from the initial sale of its stock.

Par Value

A nominal value assigned to a security or stock, often used in accounting to represent the standard or face value.