Question

Which of the following is a possible consequence of a breakdown of corporate governance?

Multiple Choice Managers enrich themselves at shareholder expense.

Shareholders receive less than a fair return on their investment.

Free cash flows are not returned to shareholders in the form of dividends.

Managers have an incentive to undertake unprofitable projects to increase the size of the company.

All of the options.

Answer 1

Answer: All of the options are correct
Corporate governance is a control mechanism that a firm adopts in order to safeguard the interests of shareholders and stakeholders. We can expect transparency and accountability in the companies with good corporate governance. When corporate governance is not followed we can see all the possible consequences given in the options.