Suppose in order to defraud the shareholders,a manager sets up an independent company that he owns and sells the main company's output to this company.He would be tempted to set the transfer price

Question

Quizplus · Accepted Answer

Setting the transfer price below market prices allows the manager to buy the main company's output at a lower cost through the independent company he owns, thereby defrauding the shareholders by diverting profits from the main company to his own.

Suppose in Order to Defraud the Shareholders,a Manager Sets Up