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.

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Definitions:

Opponent Process Theory

A theory suggesting that emotions are regulated by mechanisms that operate in opposing pairs, such as fear-relief or pleasure-pain.

Addiction

A psychological and physiological reliance on a substance or activity, characterized by compulsive engagement despite adverse consequences.

Dishabituation

The renewal or increase in responsiveness to a stimulus following a period of habituation or decreased responsiveness.

Reward

A stimulus or event that follows a behavior and increases the likelihood of that behavior being repeated.