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Sagot :
Answer:
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.
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.
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