Deck 1: law, value creation, and risk management

Question 1

Managers are ethically prohibited from providing independent legal representation for employees when a company is confronted with a criminal investigation.

Answer 1

False

Question 2

Private law provides the legal rules within which firms compete.

Answer 2

False

Question 3

When a criminal investigation appears likely,managers should act immediately to advise employees to destroy electronic documents,such as e-mails,pertaining to the matter under investigation.

Answer 3

False

Question 4

As used in the text,the term "legal astuteness" refers to the ability of a manager to avoid situations making consultation with legal counsel necessary.

Question 5

It is the job of the general manager of a business,not the lawyer,to decide which allocation of resources and rewards makes the most business sense.

Question 6

The European Union's center of operations is in Brussels,Belgium.

Question 7

Corporate officials cannot be held criminally liable for wrongdoing on behalf of a corporation.

Question 8

Researchers have determined that Fortune 500 firms convicted of illegal conduct earned significantly lower returns on assets than firms that had not been convicted of wrongdoing.

Question 9

Worker protection is one major public policy concern underlying U.S.business law.

Question 10

The choice of business entity will determine the investors' liability for the debts of the business.

Question 11

The Election Act of China gives business people the right to be elected as congresspersons.

Question 12

Managers can make their own "public" law.

Question 13

Lobbying legislators is one method by which managers can help shape the environment in which
they do business.

Question 14

A legally astute manager understands that legal analysis is often ambiguous.

Question 15

Supervisory boards of large German corporations are elected entirely by the shareholders.

Question 16

A legally astute manager would wait as long as possible to consult legal counsel once a problem arises in order to keep legal fees to a minimum.

Question 17

Laws enacted in response to corporate misdeeds often impose fewer restrictions and costs on business than would have been imposed had firms acted more responsibly at the outset.

Question 18

Promoting economic growth is one of the primary public policy objective of laws and regulations applicable to business.

Question 19

Employee statements are a primary investigatory source when corporate wrongdoing
is alleged.

Question 20

An insight of the "stakeholder" theory is that firms have relationships with many constituent groups.

Question 21

Which of the following is not a component of legal astuteness?

A)A set of value-laden attitudes about the importance of law to the firm's success
B)A reactive approach to regulation
C)The ability to exercise informed judgment when managing the legal aspects of business
D)Context-specific knowledge of he law and the appropriate use of legal tools

Question 22

What was the court's ruling in the case of Image Technical Services v.Eastman Kodak Co.discussed in the text?

A)That Kodak's intellectual property rights in patented parts established a legitimate business justification for refusing to sell those specialized parts to an independent service organization only if service of Kodak machines constituted less than 75 of the business of any independent service organization.
B)That Kodak's intellectual property rights in patented parts established a legitimate business justification for refusing to sell those specialized parts to an independent service organization only if service of Kodak machines constituted less than 50 of the business of any independent service organization.
C)That Kodak's intellectual property rights in patented parts established a legitimate business justification for refusing to sell those specialized parts to an independent service organization only if service of Kodak machines constituted less than 25 of the business of any independent service organization .
D)That Kodak's intellectual property rights in patented parts did not establish a legitimate business justification for refusing to sell those specialized parts to independent service organizations.

Question 23

Which of the following has the responsibility for deciding which allocation of resources and rewards in a business makes the most business sense?

A)The general manager
B)The in-house lawyer
C)An independently retained lawyer
D)An independently retained law firm,not just one lawyer

Question 24

Which of the following is a way in which U.S.business law promotes consumer welfare?

A)By encouraging the sale of safe products at a fair price
B)By preventing deceptive practices
C)By refusing to recognize consumer privacy
D)By encouraging the sale of safe products at a fair price and by preventing deceptive practices,but not by refusing to recognize consumer privacy

Question 25

Managers can make their own ______ law by entering into contracts and crafting certain governance structures.

A)Public
B)Primary
C)Cohesive
D)Private

Question 26

What percentage of the members of supervisory boards of large German corporations are elected by the workers and unions?

A)80
B)75
C)50
D)None

Question 27

Which of the following is a type of law referencing formal rules embodied in constitutions and statutes enacted by legislatures?

A)Public
B)Private
C)Substantive
D)Remedial

Question 28

Which of the following is listed in the text as a component of managing risk when assembling a team in business development?

A)Analyzing any covenants not to compete
B)Purposefully refusing to address issues such as sexual harassment at such an early stage
C)Informing employees regarding the e-mail communications are not discoverable
D)Refusing to provide whistleblower protection

Question 29

Which of the following recognizes that a firm's resources can be a source of sustained competitive advantage if they are valuable,rare,and imperfectly imitable by competitors,and have no strategically equivalent substitutes?

A)The value-response theory
B)The corporate -resource view
C)The resource-based view
D)The competitive-advantage view

Question 30

Which of the following is a way in which managers can help shape the legal environment in which they do business?

A)By lobbying legislators
B)By forming coalitions
C)By refusing to follow laws viewed as unneeded by company officials
D)By lobbying legislators and by forming coalitions,but not by refusing to follow laws viewed as unneeded by company officials

Question 31

Which of he following is not a way in which laws and regulations promote economic growth?

A)By refusing to enforce private agreements
B)By protecting private property rights
C)By allocating risks
D)By facilitating the raising of capital

Question 32

Which of the following is a term addressing the ability of a manager to communicate effectively with counsel and to work together to solve complex problems?

A)Legal astuteness
B)Conciliatory interaction
C)Mediation
D)Arbitration

Question 33

Which of the following is true regarding legally astute management teams practicing strategic compliance management?

A)The cost of complying with government regulation is viewed as an investment,not an expense.
B)The cost of complying with government regulation is viewed as an expense which should be avoided until legal action is threatened.
C)Only the minimum necessary to comply with any applicable law should be done.
D)Both that the cost of complying with government regulation is viewed as an expense which should be avoided until legal action is threatened and that only the minimum necessary to comply with any applicable law should be done.

Question 34

Which of the following is listed in the text as a component of managing risk in the harvesting stage of business development?

A)The encouragement of insider trading
B)The ban of police trades
C)Incomplete disclosure in prospectus
D)Incomplete disclosure in acquisition agreement

Question 35

The ______ approach recognizes that "business decisions consist of continuous,interrelated economic and moral components" and that "the moral aspects of choice" are the "final component of strategy."

A)Procedural
B)Systems
C)Conciliatory
D)Mandated

Question 36

Which of the following is not one of the four primary public policy objectives of the laws and regulations applicable to U.S.business in the early twenty-first century?

A)Promoting economic growth
B)Protecting workers
C)Promoting public welfare
D)Promoting governmental regulation

Question 37

Which of the following is a theory that recognizes that firms have relationships with many constituent groups which both affect and are affected by the actions of the firm?

A)Stakeholder
B)Stockholder
C)Relational
D)Cohesive

Question 38

Which of the following is a type of law referencing formal rules embodied in judicial decisions rendered by courts?

A)Public
B)Private
C)Substantive
D)Remedial

Question 39

Which of the following is a way in which U.S.business law promotes worker protection?

A)By requiring the employer to provide certain benefits
B)By regulating certain terms and conditions of employment
C)By protecting workers' civil rights
D)All the responses are correct

Question 40

What percentage of the members of supervisory boards of large German corporations are elected by shareholders?

A)80
B)75
C)50
D)None

Question 41

Fact pattern 1-1
Susan,the general manager of ABC Company begins to hear rumors that corporate taxes are being computed improperly,and perhaps illegally.She calls her in-house counsel,Bob,to ask his advice.Bob recently went to work for ABC Company just after he finished law school.Susan hired him without experience because she did not have to pay him as much as more experienced lawyers.Bob advised Susan that rumors rarely indicate any type of violation but a preliminary investigation should be done to determine if potential problems exist.He advised her that if an investigation indicates the existence of problems,she should keep the information quiet and not report it to her superiors or to the ethics program at the company since she does not want to stir up trouble for herself or Bob.Bob also tells Susan to trust him to make any internal investigation needed because such investigations are best made by in-house counsel.
Refer to fact pattern 1-1.Which of the following is true regarding Bob's statement that any legal problems should be kept quiet and not disclosed to Susan's superior or the board of directors?

A)Bob is incorrect since if additional information seems to substantiate the rumors,even partially,Susan should report the information through appropriate channels.
B)Bob is incorrect only if the information could potentially implicate Susan's superior.
C)Bob is correct only if potential felony charges are involved.
D)Bob is correct.

Question 42

Which of the following is a government agency referenced in the text that is considering a ban on certain types of children's advertising?

A)The American Consumer Agency
B)The Federal Communications Commission
C)The Federal Trade Commission
D)The Federal-State Advertising Coalition

Question 43

Discuss ways in which illegal conduct on behalf of executives of a business can put the business at a competitive disadvantage.

Question 44

Fact pattern 1-1
Susan,the general manager of ABC Company begins to hear rumors that corporate taxes are being computed improperly,and perhaps illegally.She calls her in-house counsel,Bob,to ask his advice.Bob recently went to work for ABC Company just after he finished law school.Susan hired him without experience because she did not have to pay him as much as more experienced lawyers.Bob advised Susan that rumors rarely indicate any type of violation but a preliminary investigation should be done to determine if potential problems exist.He advised her that if an investigation indicates the existence of problems,she should keep the information quiet and not report it to her superiors or to the ethics program at the company since she does not want to stir up trouble for herself or Bob.Bob also tells Susan to trust him to make any internal investigation needed because such investigations are best made by in-house counsel.
Refer to fact pattern 1-1.Which of the following is true regarding Bob's statement that rumors rarely indicate any type of violation?

A)Bob is correct since research has shown that rumors indicate the presence of violations in only 10% of cases.
B)Bob is correct since research has shown that rumors indicate the presence of violations in only 20% of cases.
C)Bob is correct since research has shown that rumors indicate the presence of violations in only 5%of cases.
D)Bob is incorrect.

Question 45

Fact pattern 1-1
Susan,the general manager of ABC Company begins to hear rumors that corporate taxes are being computed improperly,and perhaps illegally.She calls her in-house counsel,Bob,to ask his advice.Bob recently went to work for ABC Company just after he finished law school.Susan hired him without experience because she did not have to pay him as much as more experienced lawyers.Bob advised Susan that rumors rarely indicate any type of violation but a preliminary investigation should be done to determine if potential problems exist.He advised her that if an investigation indicates the existence of problems,she should keep the information quiet and not report it to her superiors or to the ethics program at the company since she does not want to stir up trouble for herself or Bob.Bob also tells Susan to trust him to make any internal investigation needed because such investigations are best made by in-house counsel.
Refer to fact pattern 1-1.Which of the following is true regarding Bob's statement that any investigation should be undertaken by in-house counsel?

A)Bob is correct only if the investigation could not result in criminal charges against Susan.
B)Bob is correct only if the investigation could not result in criminal charges against Bob.
C)Bob is correct only if the investigation could not result in criminal charges against Susan or Bob.
D)Bob is incorrect.

Question 46

Congress rescinded the jurisdiction of which of the following agencies over advertising to children?

A)The American Consumer Agency
B)The Federal Communications Commission
C)The Federal Trade Commission
D)The Federal-State Advertising Coalition

Question 47

Molly,the CEO of a corporation owning a number of pet stores,calls you for advice.She tells you that she had inside information that the stock of the company was going to go down because of reports a number of dogs sold by the store had become ill and,therefore,immediately sold all her stock in the company before the information became public.She tells you that she has been advised that she is going to be charged with a securities violation involving insider trading.Which of the following is true regarding her situation?

A)Corporate executives may be fined but may not be sent to jail.
B)Corporate executives may be sent to jail,but only for offenses endangering others.
C)Corporate executives may be sent to jail,but only for fraud involving banks.
D)Corporate executives may be sent to jail for violation of criminal laws.

Question 48

List four ways by which U.S.laws promote consumer welfare.

Question 49

Which of the following is true regarding the criminal law in China?

A)It prohibits businesses from paying bribes to government officials,but a payment of money is not considered a bribe unless the amount is significant.
B)It prohibits businesses from paying any bribes to government officials,regardless of amount.
C)It allows the payment of bribes in any amount to government officials.
D)It allows solvent business to pay bribes in any amount to government officials,but prohibits the payment of bribes by insolvent businesses.

Question 50

Which of the following was created by food advertisers in an attempt to halt government regulation aimed at stopping marketing preying on children's vulnerability?

A)The Children's Advertising Review Unit
B)The Minor's Board Unit
C)The Minor Protection Review Unit
D)The Children's Enhancement Board

Question 51

What are the four ways referenced in the text by which U.S.law promotes public welfare?

Question 52

Assume that after paying a large fine,a company survives charges of illegal activity.In what ways does illegal conduct put a company at a competitive disadvantage?

Question 53

Toby,the CEO of a company that manufactures a certain type of shampoo claimed to leave hair clean for weeks,has been notified that his company is under investigation because a number of customers who purchased the shampoo developed a serious skin allergy.State officials believe that company officials knew of a problem,but disclosed it and continued to market the product.Toby comes to you for advice.He says that there are a number of documents that implicate the company and that he believes the best course of action is to shred them all.What would you tell him?

A)That the documents should not be shredded.
B)That the documents should be shredded only if they have not yet been requested by subpoena.
C)That the documents should be shredded only if they are at least one year old.
D)That the documents may be shredded since a state investigation,not a federal one,is involved.

Question 54

Which of the following is a type of relationship building lobbying prevalent in China?

A)Xantu
B)Olaying
C)Guanxi
D)Quinta

Question 55

Which of the following is true regarding laws and practices of the European Union and its members?

A)European antitrust regulators are often more sympathetic to competitors than are U.S.authorities.
B)European antitrust regulators lack the authority to block mergers.
C)European antitrust regulators have the authority to block only foreign mergers,not mergers of companies located within the European Union.
D)It is expected that the impact of the European Union on corporate planning and strategy will become less,not more,evident in the future.

Question 56

Which of the following is a Chinese law applying to corporate political activities in China?

A)The Election Act of China
B)The Criminal Law of China
C)The Lobbying Law of China
D)The Election Act of China and the Criminal Law of China,but not the Lobbying Law of China

Question 57

Discuss ways in which laws and regulations promote economic growth.