With respect to stock-based compensation for managers,which of the following is most accurate?
A)It is never a useful means for incentivizing managers to create value.
B)It has proven to be a useful tool to incentivize managers to create value in most cases.
C)There is not enough evidence to reach conclusions concerning its effectiveness.
D)It may be useful,but when it is used,macroeconomic and industry effects should be removed in formulating the compensation.

Question

Quizplus · Accepted Answer

While stock-based compensation can be useful in incentivizing managers to create value, its effectiveness can be influenced by macroeconomic and industry factors. Therefore, when using stock-based compensation, it is important to control for these effects in formulating the compensation. There is not enough evidence to fully support or refute the effectiveness of stock-based compensation as a tool for incentivizing managers.

With Respect to Stock-Based Compensation for Managers,which of the Following