Arnold is a CEO at Gamma LLC. He has control over the corporate funds of the company. Arnold has often used funds from the company to pay for his travel and hotel expenses. The funds could otherwise have increased stockholder returns. Which of the following concepts is illustrated in this scenario?

Question

Quizplus · Accepted Answer

On-the-job consumption refers to the use of company resources for personal benefit, which Arnold is doing by using company funds to pay for his travel and hotel expenses. This is a violation of his fiduciary duty to the stockholders, as it reduces their potential returns. Corporate governance is the system of rules, practices, and processes by which a company is directed and controlled. Greenmail is when a company repurchases its own shares from a hostile bidder at a premium to prevent a takeover. Information asymmetry refers to situations where one party has more or better information than the other party in a transaction. Information manipulation is the distortion or withholding of information to influence decision-making.

Arnold Is a CEO at Gamma LLC