Question

A drawback to using stock options as part of manager compensation is that Group of answer choices it encourages managers to engage in empire building. All of the listed answers are true. None of the listed answers are true. it can create an incentive for mangers to manipulate information to prop up a stock price temporarily, giving them a chance to cash out before the price returns to a level reflective of the firm's true prospects. it encourages managers to undertake projects that will increase stock price.

Answer 1

C. it can create an incentive for mangers to manipulate information to prop up a stock price

temporarily, giving them a chance to cash out before the price returns to a level reflective of

the firm's true prospects.

Step-by-step explanation:

A management stock option gives enable managers to have legal right in order to purchase some certain number of shares with the fixed price during some time in future time. Though there are some condition that are needed to be satisfied such as continued employment. It should be noted that drawback to using stock options as part of manager compensation is that it can create an incentive for mangers to manipulate information to prop up a stock price

temporarily, giving them a chance to cash out before the price returns to a level reflective of the firm's true prospects.