Tying executive compensation to stock prices may createincentives for:
A)CEOs to work harder and increase the profitability of the firm.
B)CEOs to overstate the firm's financial status.
C)Enron-type scandals.
D)All of these possibilities are correct.(True Answer )Correct

Question

Quizplus · Accepted Answer

Tying executive compensation to stock prices can motivate CEOs to improve company performance, potentially leading to increased effort and profitability. However, it can also incentivize them to manipulate financial statements or engage in risky behaviors to artificially inflate stock prices, which can lead to situations similar to the Enron scandal.

Tying Executive Compensation to Stock Prices May Createincentives For