Recent corporate scandals at firms such as Enron,WorldCom and the Italian firm Parmalat
A)show that managers might be tempted to pursue their own private interests at the expense of shareholders.
B)show that Italian shareholders are better at monitoring managerial behavior than U.S.shareholders.
C)show that white-collar criminals hardly ever get punished.
D)show that socialism is a better way to go than capitalism.

Question

Quizplus · Accepted Answer

The scandals at Enron, WorldCom, and Parmalat highlighted the fact that managers might be motivated to act in their own self-interests and disregard the interests of their shareholders. These scandals involved executives engaging in fraudulent accounting practices to inflate stock prices and enhance their own compensation packages, which eventually led to the demise of the companies. As such, the scandals underscore the importance of effective corporate governance mechanisms to ensure that managers act in the best interests of their shareholders.

Recent Corporate Scandals at Firms Such as Enron,WorldCom and the Italian