Robert has been the CEO at Nikita Incorporated for the last seven years. For the last three years, he has illegally diverted cash and assets to himself and his family members. He has abused corporate perks, such as using a company jet to fly to the Bahamas for a vacation and allowed his family members to use the gym and other amenities at the corporate office for free. He has spent corporate funds on vacation home in Miami, Florida and a threw a lavish New Year's Eve party for a hundred friends. Which of the following governance mechanisms is illustrated in this scenario?

Question

Quizplus · Accepted Answer

The governance mechanism illustrated in this scenario is self-dealing, which refers to a manager's use of their position to further their personal financial interests at the expense of the corporation. In this case, Robert has illegally diverted cash and assets to himself and his family members, abused corporate perks, and spent corporate funds on personal expenses, which are all forms of self-dealing. Stock options, the takeover constraint, employee incentives, and greenmail are not relevant in this scenario.

Robert Has Been the CEO at Nikita Incorporated for the Last