Deck 3: Business Ethics and Corporate Social Responsibility

Question 1

Under Kantianism,an ethical decision is one that maximizes utility for society as a whole.

Answer 1

False

Question 2

Critics of capitalism and Corporate America increasingly argue that corporations should follow socially responsible standards higher than that imposed by law.

Answer 2

True

Question 3

Under John Rawls's justice theory:

A)decision makers' choices are to be guided by fairness and impartiality.
B)the focus is on the process of decision making,not the outcome.
C)society's benefits and burdens should fall on only certain segments of society.
D)the morality of any action is determined by applying the categorical imperative.

Answer 3

A
Explanation: Justice theory is derived from John Rawls's book "A Theory of Justice," which argued for a just distribution of society's resources.Under this theory,the decision maker's choices are to be guided by fairness and impartiality; however,the focus is on the outcome of the decision.

Question 4

Even if the law enforces corporations to engage in ethical behavior,it is not certain that all corporations will respond to the threat of financial penalties.

Question 5

Under utilitarianism,an action is ethical only if the benefits to society outweigh their costs.

Question 6

According to Joseph L.Badaracco Jr.,the question "Which alternative best serves others' rights?" is teleological in nature in that it focuses on the morality of the consequences of the decision.

Question 7

Corporations sometimes consciously choose to break the law if it poses acceptable risks such as relatively light penalties for violation,if the benefits gained by doing so are great.

Question 8

Under Kant's "categorical imperative":

A)we must judge an action by applying it universally.
B)we should manipulate others for our self-interest.
C)the teleological ethical theory is dominant.
D)the consequences of a decision are focused on,when deciding if it is ethical.

Question 9

According to the Foreign Corrupt Practices Act (FCPA),a U.S.firm is not liable for bribes made by its foreign agents under any circumstances.

Question 10

According to the new federal sentencing guidelines implemented as part of Sarbanes-Oxley,the U.S.Sentencing Commission judges should increase the fines for companies if their directors do not take reasonable steps to monitor managerial conduct in order to discover and prevent criminal activity.

Question 11

Market forces serve as a sufficient control on corporate behavior because the market always reveals social and environmental harm.

Question 12

A group of people who must reach a consensus on an acceptable level of risk often decide on a level of risk lower than the risk they would accept as individuals is known as risky shift.

Question 13

The Organization for Economic Cooperation and Development is an international institution created for the purpose of promoting harmonized rules where multilateral cooperation is necessary.

Question 14

There is no guarantee that the values of "ethical" shareholders would be representative of society as a whole.

Question 15

If culture does shape ethical attitudes,managers in individualist societies may be more inclined to engage in insider trading than members of more collectivist societies.

Question 16

Critics claim that allocational efficiency is not society's only goal and that sometimes it must be sacrificed for other social concerns.

Question 17

Deontological theory focuses on:

A)actions.
B)consequences.
C)prime movers.
D)just distribution of society's resources.

Question 18

The theory that calls for a fair allocation of society's benefits and burdens among all members of society is:

A)the allocational efficiency theory.
B)Kantianism.
C)the modern rights theory.
D)the justice theory.

Question 19

The FCPA allows a company to pay governmental officials to secure routine governmental action.

Question 20

Modern rights theory:

A)holds that duties are absolute.
B)holds that we should not abide by a rule unless a more important rule conflicts with it.
C)must determine the fundamental rights and how they are ranked in importance.
D)argues for a just distribution of society's resources.

Question 21

The Sarbanes-Oxley Act:

A)creates a PCA Oversight Board with the authority to regulate CPA firms that audit publicly-traded companies.
B)narrowly defines the meaning of "obstruction of justice" and decreases the penalties for conscious law breaking.
C)decreases the likelihood of detection and prosecution of illegal behavior.
D)adopts the theory of allocational efficiency,under which the primary objective of a business corporation is to maximize profits.

Question 22

Under the allocational efficiency theory,the primary objective of a business corporation is to:

A)maximize profit.
B)minimize fraudulent activities.
C)maximize corporate social responsibility.
D)minimize criticism.

Question 23

The regulatory agency "capture" usually occurs through:

A)the official governmental dissolution of an agency.
B)the frequent exchange of personnel between a governmental agency and the industry it was intended to regulate.
C)litigation between a corporation and governmental agency.
D)the use of political influence to reduce the funding received by the agency enforcing the legislation.

Question 24

It is unlikely that greater control by shareholders will lead to greater corporate social responsibility because:

A)most shareholders are motivated by maximizing profits and are unlikely to approve corporate actions contrary to that end.
B)many shareholders have access to the information necessary to closely monitor the noneconomic performance of a company.
C)there is a definite chance that the values of "ethical" shareholders would be representative of society as a whole.
D)shareholders will have the power to adopt resolutions binding the corporate managers.

Question 25

Which of the following is an example of groupthink?

A)The five officers of Gateway are planning a business enterprise they know to be highly profitable.Two know the plan to be illegal.Nevertheless,they do not voice their concerns,but go along with the team's plan.
B)The five officers of Gateway devise a highly profitable plan.Dan,the CFO,points out to the group that the plan will likely get the company a good deal of negative publicity.Dan states that he will not sanction the team's plan.
C)Mike,Sean,and Ned draft plans for a new software company.They have all thought through their plans and no one has any criticisms or concerns.
D)Two Africans approach an automotive company for a dealership.The company informs them that the vast majority of black dealers are not successful in making a profit.They convince the Africans against making the deal.

Question 26

The new federal sentencing guidelines implemented as part of Sarbanes-Oxley:

A)apply both to individual board members and the corporation itself.
B)assign specific oversight responsibilities to directors.
C)are designed to give management immunity.
D)call for special committees of the board to be assigned similar functions.

Question 27

The Sarbanes-Oxley Act:

A)substantially increases the penalties for corporate wrongdoing.
B)gives corporations greater freedom from government control.
C)adopts the theory of allocational efficiency.
D)motivates executives to inflate reports of corporate profits.

Question 28

The phenomenon of "risky shift" means:

A)that groups do not accept higher risks than individuals.
B)that a corporation will shift its risk onto its customers.
C)that a group of people who must reach a consensus on an acceptable level of risk often decide on a level of risk higher than the risk they would accept as individuals.
D)the tendency for members of a group to internalize the group's values and perceptions and to suppress critical thought.

Question 29

Corporate codes of ethical conduct:

A)effectively deter unethical behavior.
B)are sometimes viewed as a thinly-veiled attempt to mislead the public into thinking that the company behaves ethically.
C)accurately reflect the values of society.
D)tend to expressly publish policies that deal directly with corruption to avert legal measures that might impose severe constraints.

Question 30

The problem with looking to "values that find wide acceptance" as a guide to ethical corporate behavior is that:

A)modern life holds a diversity of conflicting ethical views.
B)most widely-accepted values are uninformed.
C)companies will always look to profit maximization over anything else.
D)in today's global world,culture has no effect on the ethical attitudes of business managers.

Question 31

Many corporations initiate legislation in order to:

A)head off the risk of future unpredictable lawsuits.
B)ensure that their competitors are subject to more rigid constraints than is applicable to them.
C)enhance the community in which the company is located.
D)maximize the risk of more costly regulations for competitors.

Question 32

Under act utilitarianism:

A)an ethical decision is one that minimizes utility for society as a whole.
B)each person has an equal right to basic rights and liberties.
C)the action is viewed as part of a rule or habit.
D)the decision maker considers each action separately.

Question 33

Corporate social responsibility argues that ethical guidance for corporate managers may come from:

A)values that are influenced by culture.
B)corporate or industry codes of conduct.
C)corporations giving preference to their employees over the other constituencies.
D)an array of conflicting ethical views.

Question 34

Which of the following is true of the Organization for Economic Cooperation and Development (OECD)?

A)Coordinates domestic and international policies of developing countries.
B)Asserts that most company codes tend to speak in positive terms such as a commitment to honesty.
C)Created to promote rules for the corporations based on the culture of the place.
D)Asserts that most enterprises' codes of conduct expressly publish policies that deal directly with corruption.

Question 35

Advocates for socially responsible corporations sometimes recommend that corporations can sensitize themselves to outside concerns by restructuring their decision making processes to include:

A)giving shareholders lesser power.
B)changing the composition of the corporate board.
C)promoting lesser transparency within corporate structures.
D)giving greater immunity to corporates.

Question 36

The problem with the view that a corporation should attempt to act in the best interests of all of its various constituencies is that:

A)this tactic ignores the bottom line.
B)corporate managers often have a better sense of what is right.
C)the values of these constituencies may conflict.
D)local communities will not benefit from these values.

Question 37

A teleological theory based on the laissez-faire theory is:

A)act utilitarianism.
B)profit maximization.
C)rule utilitarianism.
D)difference principle.

Question 38

The Sarbanes-Oxley Act requires that:

A)public corporations disclose whether they have adopted a code of ethics for senior financial officers.
B)private corporations report any change in their code of ethics.
C)privately traded corporations have board audit committees comprising only of dependent directors.
D)special committees of the board be assigned to special areas of concern.

Question 39

The tendency to internalize group values and suppress critical thought is known as:

A)risky shift.
B)social loafing.
C)herd behavior.
D)groupthink.

Question 40

The OECD's Principles of Corporate Governance insists on:

A)greater immunity power for corporate managers.
B)lesser transparency within corporate structures.
C)greater concealment of corporate governance policies to avoid conflicts of interest.
D)greater protection for whistleblowers.

Question 41

Law may not be up to the task of forcing corporations to engage in ethical behavior for a number of reasons,including that:

A)it is not clear that all corporations will respond to the threat of financial penalties imposed by law.
B)judges are likely to be sympathetic to corporations.
C)Sarbanes-Oxley decreases the likelihood that illegal behavior will be detected.
D)corporations voluntarily elect to pursue ethical ends.

Question 42

Explain the difference between deontological and teleological ethical theories.Give an example of each.

Question 43

A corporate manager looking for ethical guidance that neither the law nor social norms accounts for must rely on:

A)a strategy that will maximize profits.
B)his/her individual conscience.
C)the advice of other managers.
D)his/her system of delegation to subordinates.

Question 44

Suppose you work for a refrigerator manufacturing company that has a factory in a small rural Nebraska town.The refrigerator plant is the town's primary source of income.The company has placed you in charge of investigating the firm's decision to move the factory to Mexico.If the company moves its manufacturing to Mexico,it can produce refrigerators at a much lower cost.Explain what a modern rights theorist would consider under these circumstances.
Student's responses will vary.A modern rights theorist would determine whether anyone's rights are negatively affected by an alternative.If several rights are affected,the rights theorist will determine which right is more important or trumps the other rights,and choose the alternative that respects the most important right.For example,if the alternative is to move to Mexico,the Nebraska employees,among others,are negatively affected.Yet if the manufacturing plant does not move,potential employees in Mexico are harmed.Are these equal rights or is it more important to retain a job one already has than to be deprived of a job one has never had? Are other rights at work here,and how are they ranked? Is it more important to maintain manufacturing production in the firm's home country for national security and trade balance reasons than to provide cheaper refrigerators for the firm's customers? Does the right of all citizens to live in a global economy that spreads wealth worldwide and promotes international harmony prevail over all other rights?

Question 45

Some of the problems raised by corporate reward structures include:

A)focusing on long-term rather than short-term profitability.
B)the interests of managers always being aligned with the long-range interests of the company.
C)managers being inclined sometimes to act irresponsibly and/or illegally without an eye to legal trouble that may occur in the future.
D)firms sacrificing the present to the future thereby promoting long-term allocational inefficiency.

Question 46

A grease payment:

A)is one that is made by a company toward foreign governmental officials to secure routine governmental action.
B)is one that is made by a company to the government for the purpose of obtaining goods-and-services contracts.
C)is an offer to make a prohibited payment.
D)is any gift of value to government officials for the purpose of obtaining business.

Question 47

Explain the theory of allocational efficiency and describe some of its some of the criticisms levied against the theory.

Question 48

"Which course of action does the most good and the least harm?" This is one of the questions to be asked by managers while making an ethical decision according to the decision-making model by Joseph L.Badaracco Jr.Discuss the nature and purpose of this question.

Question 49

Explain the theory of utilitarianism.

Question 50

The Foreign Corrupt Practices Act (FCPA):

A)prohibits payments of kickbacks to foreign businesses and their corporate officials.
B)imposes recordkeeping and internal-controls requirements on any corporation whose shares are privately traded in the United States.
C)does not require a U.S.parent corporation to make a good faith effort if the parent owns less than a majority interest in the foreign corporation.
D)deals only with payments to foreign governmental officials.