Which Among the Following Is Not One of the Reasons

question 37

Multiple Choice

Which among the following is not one of the reasons cited in the text for excessive executive compensation?

• A) Many boards of directors are passive
• B) Thorough and intense arm's length bargaining is missing
• C) Incentives that align managers' and shareholders' interests are missing
• D) CEOs are often allowed to formulate their own compensation packages

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Definitions:

Estimated Line of Cost Behavior

A projection or estimation of how costs change in relation to changes in an organization’s level of activity.

High-Low Method

An accounting technique used to estimate variable and fixed costs associated with a business activity by analyzing the highest and lowest levels of activity.

Scatter Diagram

A graphical representation used to show the relationship between two variables, often used in statistics and quality control to identify potential correlations.

Degree of Operating Leverage (DOL)

A measure of how much a company's operating income will change in response to a change in sales, indicating the company's sensitivity to changes in business volume.