All of the following contributed to recent financial crises EXCEPT
A) Focusing on earnings instead of cash flow.
B) Focusing on the short run.
C) Relying on the efficiency of financial markets.
D) Excessive risk taking due to underestimation of risk.

Question

Quizplus · Accepted Answer

The reliance on the efficiency of financial markets is not a well-established cause of financial crises. The other choices have been implicated in recent financial crises, where firms focused on earnings without considering cash flow or the long-term impact of their decisions, took excessive risks without understanding the consequences, and focused on the short run at the expense of more sustainable strategies.

All of the Following Contributed to Recent Financial Crises EXCEPT