Answered: Appraise the reasons senior management…

Principles Of Marketing

17th Edition

ISBN:9780134492513

Author:Kotler, Philip, Armstrong, Gary (gary M.)

Publisher:Kotler, Philip, Armstrong, Gary (gary M.)

Chapter1: Marketing: Creating Customer Value And Engagement

Section: Chapter Questions

Problem 1.1DQ

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Question

According to a recent study of approximately 347 financial statement frauds by the law enforcement agencies, senior management is the group most likely to commit financial statement fraud. The CEO was involved in 72% of these frauds, and the CFO’s involvement was 65%. Either the CEO or the CFO was involved in 89% of the cases. Motives for senior managers to commit financial statement fraud are varied.

Following are questions which might help to better understanding the reasoning behind.

(a) Appraise the reasons senior management would overstate or understate business performance. Elaborate.
(b) Why would CFOs cook the books even though they know that it is against the law? Elaborate.

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