Which of the Following Has Been a Negative Effect of the SEC

question 55

Multiple Choice

Which of the following has been a negative effect of the SEC requirement that publicly traded companies in the United States are required to file quarterly and annual reports that are audited by an independent, accredited accounting firm?

• A) Stockholders can have complete faith that the information contained in financial statements accurately reflects the state of affairs of a company.
• B) The information can enable a stockholder to calculate the profitability (ROIC) of a company in which he or she invests.
• C) There have been issues of misrepresentation of the true financial state of companies to investors such as inflating the revenues or earnings to generate higher stock prices to give managers the benefits of stock option grants for personal gain at the expense of stockholders.
• D) It has encouraged other developed nations to enact similar regulations and requirements.
• E) It gives consistent, detailed, and accurate information about how efficiently and effectively the agents of stockholders, the managers, are running the company.

---

Definitions:

Cultural Eutrophication

The process by which water bodies become enriched with nutrients from human activity, leading to excessive growth of algae and deterioration of water quality.

Game Fish

Describes species of fish targeted for recreational fishing, often subject to specific regulations regarding their capture, to conserve and manage populations.

Suffocation

The condition of experiencing a lack of oxygen supply to the body, often leading to unconsciousness or death.

Oxygen Sag Curve

A graphical representation showing the decrease of dissolved oxygen in a body of water downstream from a pollution source as microorganisms decompose organic matter.