Question

Motivations for fraud change from case to case, though there tends to be a common theme. Which of the following is that "common theme?"

-Attempt to improve financial information to support high stock price
-To support a bond or stock offering
-To increase stock price
-All of the above

Answer 1

Motivations for fraud generally revolve around the common theme of manipulating financial information to artificially improve the perceived value of a company, often justified by a sense of a higher good.

Step-by-step explanation:

The common theme among motivations for fraud is the desire to manipulate financial information for favorable outcomes. This can include an attempt to improve financial information to support high stock prices, support a bond or stock offering, or to directly increase stock price. Behind these actions is a balance of imperfect information, where those within a company have more insights about future profitability than outside investors.

Moreover, an individual might justify fraudulent actions by appealing to a sense of higher authority or greater good, as mentioned by Sykes & Matza (1957). While the justifications vary, the ultimate goal tends to align with artificially boosting the perceived value of the company to serve the interests of insiders at the expense of accurate representation for investors.