Earnings management typically involves manipulating financial results to meet certain targets. Measures that rely heavily on financial metrics or production quotas (like profitability, stock price, or units produced) may incentivize managers to engage in earnings management to meet targets. In contrast, performance measures focused on nonfinancial metrics (e.g., customer satisfaction, employee training, or other qualitative factors) are less susceptible to manipulation through earnings management, as they rely on real operational outcomes rather than financial figures.
D. In simpler terms, the question is asking which performance measure (a way to evaluate how well someone is doing their job) would make it less likely for managers to manipulate financial results to look better than they actually are.
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