Keesha is the CEO of a publicly-owned company. She was informed by the CFO that the company's earnings were down 30 percent from the prior year due to the recession. The company's stock price has declined by 20 percent. The CFO comes up with a scheme to hide debt and inflate revenues by selling underperforming assets to a special purpose entity affiliated with the company. Keesha is concerned about possible effects on the creditors but ultimately she agrees to the accounting. Keesha is reasoning at:
A) Stage 1
B) Stage 2
C) Stage 3
D) Stage 4

Question

Quizplus · Accepted Answer

Keesha is at stage 3, the "conventional level". She is mainly concerned with the opinions of others and maintaining the status quo. She is aware of the wrongfulness of the CFO's scheme, but ultimately agrees to the accounting in order to maintain the company's reputation and stock price.

Keesha Is the CEO of a Publicly-Owned Company