How Can a Self-Serving Bias Be Observed in a Corporate

question 23

Multiple Choice

How can a self-serving bias be observed in a corporate annual report?

• A) The report would say more about the company's problems and less about its successes.
• B) The report would emphasize the role of competition, inflationary pressures and other external causes of problems in the organization's performance.
• C) The report would exclude any bad news about the organization's performance.
• D) The report would acknowledge that competition, the economy and other external factors should be credited for some of the company's recent success.
• E) The report would acknowledge some of management's mistakes, but suggest that management in other companies have been making the same mistakes.

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Definitions:

Call Provision

A feature in certain contracts allowing the issuer the right to redeem or pay off the contract before its maturity date, usually bonds.

Convertible Bonds

Convertible bonds are a type of bond that can be converted into a predetermined number of the issuer's equity shares at certain times during its life, usually at the discretion of the bondholder.

Credit Ratings

An assessment of the creditworthiness of a borrower in general terms or with respect to a particular debt or financial obligation.

Nonconvertible Bonds

Bonds that cannot be converted into the issuing company's stock and must be repaid in cash at maturity.