Several studies have found that CEOs who receive large bonuses tend to perform better, yet some companies recently saw stock prices drop after paying huge bonuses. Researchers attribute this discrepancy to the timing of the payments: companies often issue bonuses right before releasing bad news to distract from the poor performance. This strategic timing has obscured the true relationship between pay and performance in the data scholars have examined.
Which choice best describes the function of the underlined sentence in the text as a whole?
It explains a discrepancy between general research findings and specific real-world events by introducing a complicating factor (timing).
It proves that paying bonuses always leads to poor stock performance.
It describes a new law that prevents companies from hiding bad news.
It argues that researchers should stop studying CEO pay.
Correct Answer: A
Choice A is the best answer. The text notes a discrepancy (bonuses usually = good performance, but sometimes = bad). The underlined sentence explains this is due to "strategic timing" which "obscured the true relationship."
Choice B is incorrect. It explains a specific anomaly, not a universal rule. Choice C is incorrect. No law mentioned. Choice D is incorrect. It critiques the data interpretation, not the field of study.