What are examples of a possible result of the conflict of interest between shareholders and corporate managers? Check all that apply: (A) Managers funding risky projects that could lose money. (B) Managers using company resources for personal benefit. (C) Managers paying themselves excessive salaries. (D) Managers faking earnings to temporarily boost the stock price.

Correct answers are

(B) Managers using company resources for personal benefit.

(C) Managers paying themselves excessive salaries.

(D) Managers faking earnings to temporarily boost the stock price.

Explanation:

(A) Managers funding risky projects that could lose money: this option will not result conflict of interest in the sense that funding any capital project that lot of money will in most cases be deliberated on the round table with the board of directors who are major shareholders.

(B) Managers using company resources for personal benefit: some dubious managers divert company resources for personal objectives such as using utility vehicles for conveying personal logistics, using company structure or name as collateral for personal loan in the financial institutions. e. t. c. This will lead conflict of interest between them and shareholders.

(C) Managers paying themselves excessive salaries: when managers they should take more than what they work for base on man hour spent doing work, or when managers assign more allowances than required to themselves, it may lead to conflict of interest between them and shareholders.

(D) Managers faking earnings to temporarily boost the stock price: managers may manipulate financial reports to optimize earning and bonuses in other to boost stock price.