Question

Which of the following is a reason that a chief executive officer might commit financial statement fraud?

1) To receive or increase a performance bonus
2) To avoid termination due to poor performance
3) To conceal the company's true performance
4) All of the above

Answer 1

A CEO might commit financial statement fraud to receive or increase a performance bonus, avoid termination due to poor performance, or conceal the company's true performance. Therefore, the correct option is 4.

Step-by-step explanation:

Financial statement fraud is a serious crime that involves intentionally manipulating or misrepresenting a company's financial statements to deceive investors, creditors, or other stakeholders. A chief executive officer (CEO) might commit financial statement fraud for several reasons:

1. To receive or increase a performance bonus: CEOs are often incentivized by bonuses tied to the company's financial performance. By manipulating the financial statements to show better results, they can increase their chances of receiving a higher bonus.
2. To avoid termination due to poor performance: CEOs who are concerned about losing their job due to poor performance may resort to financial statement fraud to create the illusion of success and hide their shortcomings.
3. To conceal the company's true performance: Sometimes, CEOs engage in financial statement fraud to hide the true financial health of the company. This deception can be used to attract investors, maintain stock prices, or secure loans.

Therefore, the correct answer is 4) All of the above.