It may be appropriate to remunerate a manger using reported profits under which of these circumstances?

Question

Quizplus · Accepted Answer

Both circumstances A and B provide valid reasons for using reported profits as a basis for remunerating a manager. In case A, when a firm's market value is non-observable due to thin trading, using reported profits can be a practical alternative for performance measurement. In case B, for management levels below the CEO, reported profits can serve as a more direct and controllable performance metric, making it appropriate for their remuneration.

It May Be Appropriate to Remunerate a Manger Using Reported