Why Is the Validity and Reliability of Financial Disclosures of Limited

question 44

Multiple Choice

Why is the validity and reliability of financial disclosures of limited importance in the People's Republic of China (PRC) ?

• A)China has no corporations with publicly traded stock.
• B)The government owns all of the corporate stock traded in the PRC.
• C)Most of the stock purchased in the PRC is held for only a short period of time.
• D)Most of the stock is rated by the government of the PRC in terms of its quality.

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Definitions:

Small Corporations

Refers to corporations with a limited number of shareholders and reduced regulatory requirements.

Board of Directors

A group of individuals elected to represent shareholders and oversee the major decisions and policies of an organization.

Preemptive Right

A shareholder’s right to purchase a proportionate share of every new offering of stock by the corporation.

Shareholder's Right

The entitlements or privileges granted to an individual or entity that owns shares in a corporation, including the right to vote on corporate matters and to receive dividends.