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Below is an extract from a newsclip. "Sometimes CEOs misbehave. This misbehaviour has terrible consequences...

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Accounting

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Below is an extract from a newsclip. "Sometimes CEOs misbehave. This misbehaviour has terrible consequences for the CEO, the organisation and society, yet still - they do it. Recent estimates suggest that fraud, a specific type of wrongdoing, results in a loss of 5 per cent of sales for a typical company every year and a global loss of about $3.7 trillion." Required: (a) Referring to the agency theory, briefly explain why CEOs misbehave. (Maximum words: 100) (2 marks) (b) Referring to the agency theory, briefly explain how a company can minimise such a misbehaviour. (Maximum words: 200) (4 marks) (Total for Question 3: 6 marks)

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