GeoTransmit, a Large Multinational Telecommunications Company, Hid from Its Investors

question 66

Multiple Choice

GeoTransmit, a large multinational telecommunications company, hid from its investors the extensive debt and losses it had accumulated. Its fraudulent accounting behavior was eventually discovered, and the company went bankrupt. Which of the following statements is true of the future of GeoTransmit and its stakeholders?

• A)The different stakeholders of GeoTransmit will be affected in different ways.
• B)The decision of GeoTransmit to hide its losses from its investors will not have any impact on its market value.
• C)The stakeholders of GeoTransmit will not be affected by its fraudulent practices.
• D)The decision of GeoTransmit to hide its losses from its investors is considered to be ethical.

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Definitions:

Knowledge Bias

Knowledge bias is the tendency to distort or interpret information in a way that confirms one’s preexisting beliefs or knowledge.

Drug Companies

Firms involved in the research, development, production, and marketing of medications and pharmaceutical products.

Halo Effect

A cognitive bias where positive impressions in one area lead to positive assessments or assumptions in other areas, often unrelated.

Associative-cluster Effect

Describes how ideas or memories are linked together in the mind, leading to the easy recall of associated information when a related concept is encountered.