Which of the Following Statements Is FALSE

question 30

Multiple Choice

Which of the following statements is FALSE?

• A)The substantial use of stock and option grants in the 1990s greatly increased managers' pay-for-performance sensitivity.
• B)The optimal level of sensitivity of managers' compensation to the performance of their firms depends on the managers' level of risk aversion,which is hard to measure.
• C)While decreasing managers' risk exposure,increasing the sensitivity of managerial pay and wealth to firm performance does have some negative effects.
• D)In the absence of monitoring,the other way the conflict of interest between managers and owners can be mitigated is by closely aligning their interests through the managers' compensation policy.

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Definitions:

Longitudinal Studies

Research methods that study the same subjects over a period of time, often years or decades, to observe changes and development.

Intelligence Scores

Quantitative measures often obtained through standardized tests that assess various aspects of a person's intellectual ability.

Complex Occupational Activities

Tasks or jobs that require a high level of skill, knowledge, or expertise, often involving problem-solving, decision-making, and creativity.

Intellectual Ability

The capacity to understand complex ideas, adapt to environments, learn from experience, and engage in various forms of reasoning.