Related diversification by a firm tends to reduce a manager's executive compensation, whereas unrelated diversification tends to increase it because the firm has moved into new industries.

Question

Quizplus · Accepted Answer

This statement is false. Related and unrelated diversification do not have a clear and direct relationship with executive compensation. Executive compensation is influenced by various factors, including the firm's financial performance, market conditions, and individual performance. The extent to which diversification impacts executive compensation may depend on the specific context and circumstances of the firm.

Related Diversification by a Firm Tends to Reduce a Manager's