bhaddieraven
bhaddieraven
03.09.2019 • 
Business

Consider the following scenario and determine whether an agency conflict exists: last week, an investigative reporter for a major metropolitan newspaper discovered that the doctors conducting clinical trials of a new cancer treatment drug are also the principal shareholders in cancer solutions inc. (csi). csi is the company developing and attempting to market the drug. upon being interviewed by federal authorities, the doctors acknowledged their conflict of interest but reported that they were sold the shares at a 75% discount by csi’s chief financial officer. the cfo was concerned that csi might not be able to meet its annual performance objectives and in turn pay his anticipated multimillion-dollar bonus. does an agency conflict exist between csi’s cfo and the company’s shareholders? no; professionals, such as doctors and professional money managers, would not participate in unethical activities. no; in general, shareholders are satisfied with company officers engaging in any type of legal or illegal activity to ensure the chances of them receiving greater dividend payments. yes; the shares should not have been sold at a 75% discount, which is price discrimination. yes; csi’s cfo engaged in unethical conduct to manipulate the firm’s short-term earnings and improve the likelihood of receiving his annual bonus.

Solved
Show answers

Ask an AI advisor a question