Deck 5: Business,Societal,and Ethical Contexts of Law

Question 1

People and companies that are directly and indirectly affected by another company's decisions are called _______.

Answer 1

Stakeholders

Question 2

Altering people's values is one of the objectives of an organizational ethics program.

Answer 2

False
Explanation: Organizational ethics programs manage values and conflicts among them rather than a person's personal values.

Question 3

Ethical misconduct includes not only illegal and unethical practices but also includes questionable practices of managers and organizations.

Answer 3

True
Explanation: Questionable practices raise ethical questions just as blatantly illegal and unethical practices do.

Question 4

Religious teachings and ethics are separate and distinct and rarely if ever overlap.

Question 5

Business ethics is a recent phenomenon not recognized or considered prior to the mid to late 1900's.

Question 6

A company's environmental policy and employee expectations regarding protection of the environment would be found in the company's code of _______.

Question 7

Enron Corporation was a private corporation dealing in a governmentally regulated market.

Question 8

The notion of ________ is a central theme in Immanuel Kant's work.

Question 9

________ refers to the having a conscious system in use for deciding moral dilemmas.

Question 10

That society is best served when companies aggressively seek a competitive advantage and that ethical violations will eventually harm companies reflects the narrow view or ________ hand theory of corporate social responsibility.

Question 11

What is considered an ethical practice,once established,remains constant and acceptable unless specifically preempted by statute.

Question 12

As a result of the Enron scandal,Congress passed the ________ Act increasing management responsibilities and liabilities regarding those involved in the finances of public companies.

Question 13

Ethical problems faced by managers almost always come down to a clear choice with one option clearly the most ethical choice.

Question 14

A particular act can be deemed unethical yet still be legal.

Question 15

The terms morals and ethics are synonymous.

Question 16

Prioritizing moral values for an organization and ensuring that behaviors are aligned with those values is known as _______.

Question 17

A company's Code of Conduct and Code of Ethics may be combined into a single document.

Question 18

Treasury Secretary Geitner had knowledge of the AIG bonuses but failed to stop them because they were ________ obligations between a private company and its employees.

Question 19

The ________ based standard requires that the majority good be placed ahead of the individual good when faced with a moral dilemma.

Question 20

Generally accepted standards of right and wrong in a given society are called _______.

Question 21

AIG caused a major political firestorm when,after receiving taxpayer bailout money,they distributed $165 million in performance bonuses to executive employees.

Question 22

Honoring ethical values,respecting communities and the environment while recognizing the interest in its shareholders are elements of corporate citizenship.

Question 23

Social responsibility is at its highest when the moderate view a/k/a government's hand theory of corporate social responsibility is utilized.

Question 24

Linda's company has a code of ethics and a separate code of conduct.If she would like to be sure that she complies with the company dress code she would reference the code of ethics.

Question 25

Immanuel Kant is credited with developing the utilitarian stream of moral reasoning.

Question 26

In early part of the 2000's,Wall Street analysts rated Enron's stock risk as "staggeringly low".

Question 27

One of the major reasons that Enron failed was because they did not have an articulated Code of Ethics to guide them.

Question 28

The fundamental underlying concept of corporate social responsibility is that conscience resides in individuals but not in a corporation itself.

Question 29

As of today,the Enron bankruptcy remains as the largest corporate bankruptcy in America's history.

Question 30

Tom's company has a code of ethics and a separate code of conduct.If he would like to find out about the company's expectations or requirements regarding community service,he would reference the code of ethics.

Question 31

The final result of the AIG bonusgate scandal was that no new laws or taxes were enacted,nor were there any additional official actions taken by Congress or the president.

Question 32

The invisible hand theory advocates do not trust corporate leaders with stewardship over noneconomic values.

Question 33

Leah has just handed in a major required report to her professor and after careful scrutiny,the professor finds numerous instances of plagiarism.If the school policy and the professor's personal perspective follow a principles-based approach,Leah should be charged and suffer whatever penalty is prescribed by school policy.

Question 34

Codes of ethics are insufficient and do not serve their proper purpose if they are intended only to ensure that company policies are legal.

Question 35

Corporations as a business entity cannot be charged with a crime,only the individuals that make up the company's officers and board.

Question 36

Arthur Andersen,as a result of its conviction following the Enron scandal,is now completely out of business.

Question 37

A comprehensive values management program may be used in managing a corporation's diversity program.

Question 38

Kenneth Lay,Enron's CEO is currently serving a prison sentence as a result of his fraudulent dealings which led to the Enron Scandal.

Question 39

Grimshaw v.Ford Motor Company is often cited as a failing of the management's hand approach to corporate social responsibility.

Question 40

Enron profits showed that first quarter revenues rose from $12 billion in 2000 to $84 billion in 2001.

Question 41

Shelly is a state legislator.A bill to legalize gambling has been introduced in her state and she is deciding how to vote on it.Shelly owns 10,000 shares of stock in a company that manufactures slot machines.She wants to remain ethical and is not sure if she should disclose her holdings and disqualify herself from the vote.

A) Shelly need not disclose her holdings and disqualify herself if her vote is based on what is best for the state and not for her
B) Shelly need not disclose her holdings and disqualify herself from voting as long as she has nothing to do with negotiating the contract for the slot machine provider
C) Shelly should disclose her holdings and but not disqualify herself from voting because as long as she doesn't hide anything she can't be faulted
D) Shelly should disclose her holdings and disqualify herself from voting because her potential conflict of interest, real or not, would make her actions ethically questionable

Question 42

Enron Corporation was a multinational conglomerate with a core business of:

A) oil and gas exploration and production.
B) energy trading.
C) insurance and stock speculation.
D) banking and mortgage lending

Question 43

In Arthur Andersen LLP v United States,Andersen's appeal of their previous conviction was overturned by the Supreme Court because:

A) it was determined that the trial court's jury instructions were defective.
B) it was determined that the government had not met its burden of proof.
C) it was determined that Andersen was acting solely on Enron's directions and that only Enron could be held responsible.
D) it was determined that no law existed at the time that Andersen acted that prohibited the shredding of corporate documents and such law was passed after the scandal and could not be enforced retroactively

Question 44

Big Bucks Bank has published a detailed company ethical code based on an extensive values management process.The code specifies that all dealings with customers are to be fully documented and all dealings with the public are to be not only legal but should be based on what is best for the consumer.Everyone who deals with a customer is responsible for what they advise and must document conversations.Promotions and rewards will be based on not only productivity but also on fairness and how the customer is dealt with.At the weekly mortgage department meeting,Bill the supervisor informs his department that the loan production is way down and that they need to do whatever is necessary to step up the amount of loans granted.As a result,a number of questionable loans are granted which make money for Big Bucks but result in families being foreclosed on.Assuming the questionable loans to be unethically given,which trait of an ethical company has been breached?

A) senior management has not articulated a clear vision of integrity
B) policies and practices of the mortgage department are not aligned with those of the organization
C) responsibility is collective rather than individual
D) nothing has been breached as this is common amongst even the most ethical of companies

Question 45

The utilitarian approach to moral philosophy was founded by:

A) Jeremy Bentham.
B) Immanuel Kant.
C) Cicero.
D) Kenneth Lay

Question 46

"What if everyone took these same actions" is a question sometimes called the:

A) universalization approach.
B) utilitarian approach.
C) functionality approach.
D) morality approach

Question 47

In Grimshaw v.Ford Motor Company,if Ford had made the repairs to the cars,diminishing profit but enhancing customer safety,which theory of corporate social responsibility would Ford have been exhibiting?

A) the narrow view a/k/a invisible hand theory
B) the moderate view a/k/a government's hand theory
C) the hybrid view a/k/a citizen's hand theory
D) the broad view a/k/a management's hand theory

Question 48

AIG received a government bailout to save the company because:

A) had the company gone bankrupt, too many employees would have become unemployed without sufficient unemployment insurance to aid them.
B) had the company gone bankrupt, the effect on New York City, where it was situated, would have been a catastrophe so the bailout was actually in part to keep New York City solvent.
C) had the company gone bankrupt, moneys already owed to the U.S. Government prior to the collapse would never have been recovered so the bailout was necessary to keep AIG in operation until they were solvent enough to repay the government.
D) had the company gone bankrupt, the U.S. financial infrastructure would have been severely or even irreparably damaged

Question 49

The moderate view of assessing corporate citizenship believes that:

A) corporate officers and boards of directors should provide the exclusive view of corporate responsibility.
B) corporate employees below the senior executive level should provide the exclusive view of corporate responsibility.
C) community groups where the corporation is located should provide the exclusive view of corporate responsibility.
D) the government should provide the exclusive view of corporate responsibility

Question 50

Fly High Aviation provides maintenance for executive jets based on private contracts with corporations that maintain airplanes for company use.Which of the following is least likely to be a Fly High stakeholder?

A) the mechanics that work for Sky High
B) the corporations that contract with Sky High for their services
C) the citizens that live near the airports that planes maintained by Sky High fly into
D) individuals who own Sky High stock

Question 51

Arthur Andersen was:

A) Enron's largest customer.
B) Enron's largest supplier.
C) Enron's auditing firm.
D) Enron's largest competitor

Question 52

The categorical imperative test consists of:

A) individuals making ethical decisions with an eye toward potential consequences if everyone in society acted similarly.
B) individuals making ethical decisions with an eye toward potential consequences if only some in society acted similarly but not all.
C) individuals making ethical decisions with an eye toward potential consequences if no one else in society acted similarly.
D) individuals making ethical decisions with an eye toward potential consequences if most in society benefit even if some in society are harmed

Question 53

KAM Corp has separate Codes of Ethics and Conduct.Each of the following would likely be included in their Code of Ethics except:

A) expectations of privacy and dignity to be afforded others.
B) expectations of an individual's community service.
C) avoidance of conflicts of interest.
D) requirements of procedural due process and impartiality

Question 54

When Enron's top executives were subpoenaed to testify before Congress,each exercised their constitutional right against self incrimination except:

A) Kenneth Lay, founder and Chief Executive Officer.
B) Jeffrey Skilling, Chief Operating Officer.
C) Andrew Fastow, Chief Financial Officer.
D) Rick Clausey, Chief Accounting Officer

Question 55

Mighty Motors is a major automobile manufacturer with assembly plants in small towns throughout the United States.Mighty Motors is suffering losses in the current economy and has decided to stop manufacturing the Mighty Brute,an SUV with horrible gas mileage that simply isn't selling.They will also be closing the only plant that is exclusively dedicated to manufacturing the Brute.This particular assembly plant is the primary employer in the town that it is located in.Who,among the following would be considered a secondary stakeholder in this decision?

A) Ed who has been working at the factory for ten years
B) See Through Glass who manufactures the windshields and side windows exclusively used in the Brute
C) Mike, a town resident who teaches elementary school and drives a Hyundai Sonata
D) Tony who runs a pizza shop that many of the plant employees go to for lunch and sometimes dinner

Question 56

After numerous threats from the federal government to enact laws and taxes to recoup bonus money paid to executive employees at AIG,of the reported $165 million paid out,how much was returned by those receiving bonuses?

A) approximately $50 million
B) approximately $75 million
C) approximately $100 million
D) approximately $120 million

Question 57

Modern Corporation operates a steel mill.They have never contributed anything to the local community and they knowingly pollute both the air and river that runs by their mill.Their reasoning is that the cost to install pollution control devices would diminish their profits and they don't support the community because they provide jobs and don't think they owe anything else to the citizens in their area.Donating to the community would also diminish profits.Which theory of corporate social responsibility are they exhibiting?

A) the narrow view a/k/a invisible hand theory
B) the moderate view a/k/a government's hand theory
C) the hybrid view a/k/a citizen's hand theory
D) the broad view a/k/a management's hand theory

Question 58

Sara is broke but needs a gown to go to a formal dance sponsored by her company.She goes to a local dress shop and purchases an expensive gown she cannot afford.She wears the gown to the event tucking in and hiding the price tag rather than removing it.She dances all night and the next day goes back to the shop and returns the dress.The store's policy is that they will accept returns for thirty days as long as the price tag is still attached.

A) Sara has not acted unethically because she complied with the store's policy
B) Sara has not acted unethically because she got the idea from an article in a magazine that said that celebrities do things like this all the time
C) Sara has not acted ethically because this is not an accepted act in the general society
D) Sara has not acted ethically if she returns the dress without cleaning it but has acted ethically if it is cleaned and sanitized before returning it

Question 59

Nobel Prize winning economist Milton Friedman believed that:

A) managers that pursue social initiatives with corporate funds are morally correct and pursuing a path that is required regarding their fiduciary duties owed to stakeholders.
B) Adam Smith's belief that the common good is best served when economic institutions don't pursue a common good but instead pursue an economic advantage is wrong and misguided.
C) the only responsibility a business has is to maximize shareholder wealth.
D) Adam Smith's " invisible hand" theory that the profits realized by amoral business are justification for the organization's acts and will ultimately be accepted by society

Question 60

Which of the following was not an argument made by recipients of AIG bonuses defending their right to receive and retain the bonus money?

A) the bonuses were negotiated into their contracts prior to the AIG collapse
B) the bonuses were based on meeting individual goals which the employees did meet
C) the bonuses were needed to retain AIG's top talent who were necessary as the company rebuilt
D) the bonuses came from money AIG had on hand at the time of the collapse and did not come from the taxpayer supplied funds

Question 61

Assume that you have money you'd like to invest in stock.Would you prefer to invest in a company that evidences values based on the invisible hand theory,the government's hand theory or the management's hand theory of operations? Explain reasons for your choice and indicate why the rejected choices were not chosen.

Question 62

Mike's Bikes is a bicycle sales and repair shop in a small city.They sell new and used bikes with a narrow profit margin and do repairs at minimal costs.Frequently if a child comes into the shop with a broken part or a flat tire they make the repair for free if the child has no money.Mike also provides a free one hour repair class for those who want to learn how to fix their bikes.At large local organized bike rides Mike's provides free services asking only for voluntary donations.Which theory of corporate social responsibility is Mike's exhibiting?

A) the narrow view a/k/a invisible hand theory
B) the moderate view a/k/a government's hand theory
C) the hybrid view a/k/a citizen's hand theory
D) the broad view a/k/a management's hand theory

Question 63

You are the CEO of a major corporation that is suffering financially in the current economy.Your board has tasked you with cutting employee related costs by 5%.Recognizing and referencing the pros and cons of alternative approaches you could take and the ethical theories that apply; what would you do?

Question 64

Harry seeks to implement a policy of enhanced values management in his office.Which of the following is not a direct outcome of values management in the workplace that Harry can directly expect?

A) managing values in Harry's workplace will legitimize managerial actions
B) managing values in Harry's workplace will strengthen the cohesiveness and balance of his organization's culture
C) managing values in Harry's workplace will enhance profit and profitability
D) managing values in Harry's workplace will cultivate greater sensitivity to the impact of the company's values and messages

Question 65

When developing a Code of Ethics,what are the four key points that must be followed to create a usable and effective document?

Question 66

In Grimshaw v.Ford Motor Company,Ford was found liable because:

A) Ford ignored a governmental recall warning to the detriment of its customers.
B) Ford placed profit over the potential impact to customers including potential loss of customer's lives.
C) Ford improperly designed the Pinto and did few if any safety tests so the flaw wasn't uncovered until accidents started occurring.
D) Ford acted unethically by hiding the fact that lawsuits were being filed for the Pinto's defect from the government and the general public

Question 67

What ethical lapses was Arthur Andersen guilty of in its involvement in the Enron scandal? Explain.

Question 68

George is 85 years old and Grace,his wife,is 83.They are on a fixed retirement budget and have no disposable income and they have no savings.Grace's doctor informs her that she requires a particular medicine that costs $84.00.They don't have money to buy the medicine,there are no relatives or friends to ask and there are no programs that can provide them with the medicine money.Feeling he has no choice,George goes to the local bank and robs it,handing the teller a note demanding $84 in small bills.Discuss George's action from a moral and ethical point of view.

Question 69

The triple bottom line in the perspective of corporate social responsibility consists of each of the following except:

A) creation of profit.
B) creation or destruction of environmental value.
C) creation of social value.
D) creation of private value

Question 70

What were the reasons offered to defend the fact that AIG had paid $165 million in bonuses to certain employees?

Question 71

Each of the following is a key component in the creation and implementation of a company's value management program except:

A) identifying the values that the company should promote.
B) identifying the values that the company's peer competitors promote.
C) developing written policies and procedures to align behaviors with the company's preferred values.
D) training personnel about the policies and procedures implemented

Question 72

The reputed mastermind of the Enron business model was:

A) Kenneth Lay, founder and Chief Executive Officer.
B) Jeffrey Skilling, Chief Operating Officer.
C) Andrew Fastow, Chief Financial Officer.
D) Rick Clausey, Chief Accounting Officer

Question 73

What is the difference between ethics and morals?

Question 74

Faber College,founded in 1904 is an integral part of its surrounding community.Which of the following is a primary stakeholder in Faber College?

A) the students
B) the authors of the text books sold to the bookstore for student purchase
C) the local bar that student frequent when they are not studying
D) the community newspaper that runs a weekly column discussing the events at Faber

Question 75

Valarie is employed as a sales representative at a major corporation.On occasion she feels like the,the men at her office stare at her and they occasionally make suggestive comments which upset her and make her uncomfortable.When she complains to her Human Resource Department,they inform her that they will send out a memo asking the male employees to start acting more professionally but the HR Department doesn't feel that the conduct has broken any laws.When she says the company and the male employees are not acting ethically,that implies that this is a legal but not an ethical matter.Do you agree or disagree and why?

Question 76

That corporations have a social responsibility and that profitability should be secondary reflects:

A) the narrow view a/k/a invisible hand theory.
B) the moderate view a/k/a government's hand theory.
C) the hybrid view a/k/a citizen's hand theory.
D) the broad view a/k/a management's hand theory

Question 77

Which of the following is not a challenge to the concept that values management programs should not be given priority in the corporate world?

A) ethics cannot be taught
B) complying with the law is all that a corporation needs to do to remain ethical
C) ethics cannot be managed
D) success is measured in profits and losses, not in ethical conduct

Question 78

Why is the case of Grimshaw v.Ford Motor Company looked at as an example of the failing of the invisible hand and government's hand approaches to corporate social responsibility?

Question 79

Name the five step process that a manager should use for ethical decision making.

Question 80

As a result of the AIG bailout,the U.S.Government received a/an ________ stake in the company.

A) 50%
B) 60%
C) 70%
D) 80%