Dishonest corporate accounting procedures would cause stock prices to ________.
A) remain unchanged
B) decrease due to lower expected dividend growth and lower required return
C) decrease due to lower expected dividend growth and higher required return
D) increase due to higher expected dividend growth and lower required return

Question

Quizplus · Accepted Answer

Dishonest corporate accounting procedures would result in lower expected dividend growth as well as higher risk associated with the stock. Investors would demand a higher return on their investment, resulting in a higher required return. This combination would make the stock less attractive and lower its price.

Dishonest Corporate Accounting Procedures Would Cause Stock Prices to ________