When managers knowingly bias estimates of cash flows from investment projects in order to serve their personal objectives, they are ____.
A) performing management by exception
B) increasing their total compensation
C) departing from the shareholder wealth maximization goal
D) increasing their confidence level

Question

Quizplus · Accepted Answer

Managers who bias estimates of cash flows from investment projects for their personal objectives, such as increasing their own prestige or job security, are departing from the goal of shareholder wealth maximization. This can lead to poor investment decisions that harm the long-term value of the firm for its owners.

When Managers Knowingly Bias Estimates of Cash Flows from Investment