Question 1

At a board meeting for Webster Corporation, the members of the board discuss how a fellow board member is addicted to alcohol and it is affecting his work performance and his personal life. As a board, they decide to pay for a very expensive rehabilitative program at a facility several states away in California, with corporate funds. This will be a very expensive endeavor, using about 10% of the current year's profit but they hope that their friend will overcome his addiction. One board member, Nolan, objects to this stating, that if they individually want to pay for his treatment with their own money, they can, but they cannot use corporate funds for this as their only ethical duty is to make as much profit as possible so that stakeholders can decide how they want to spend their money. Nolan is employing what type of ethical decision making view of corporate social responsibility?

Accepted Answer

Nolan is employing the maximizing profits theory of Friedman, which posits that the primary ethical duty of a corporation is to its shareholders, and that duty is to maximize profits. This view argues against using corporate funds for purposes that do not directly contribute to increasing shareholder value, such as paying for an employee's personal rehabilitation.

Question 2

Under the Moderate View of corporate social responsibility the __________ always represents the aggregate moral views of the public.

Accepted Answer

Under the Moderate View of corporate social responsibility, the government is seen as representing the aggregate moral views of the public, as it is elected by the people and supposed to reflect their collective values and interests.

Question 3

Under the theory of Milton Friedman, should a corporation donate money to charitable organizations?

Accepted Answer

Milton Friedman argued that the primary responsibility of a corporation is to its shareholders, and that it should focus on maximizing profits rather than engaging in social activities such as donating to charity, unless those activities are directly related to the business's economic interests.

Question 4

The broadest view of Corporate Social Responsibility is that corporations have a social responsibility to which profit is secondary is called

Accepted Answer

The Public theory posits that corporations have a responsibility to society that goes beyond profit-making, suggesting that their social responsibilities are primary.

Question 5

After the recent fire which substantially damaged Notre Dame in Paris, Corporation X, decides to dedicate half of its profits for the next two years to the rebuilding efforts. Under which corporate social responsibility ethical decision making theory would this most likely be proper?

Accepted Answer

The answer of After the recent fire which substantially damaged...

Question 6

Which state, in which the majority of corporations are incorporated, asserts that manager can consider non-shareholder interests in scenarios such as mergers as long as there is some connection to providing value to shareholders?

Accepted Answer

Delaware law allows managers to consider the interests of non-shareholder stakeholders (such as employees, customers, and the community) in their decision-making, particularly in the context of mergers and acquisitions, as long as there is some rationale that these considerations ultimately benefit the shareholders. This flexibility is one reason why a majority of corporations choose to incorporate in Delaware.

Question 7

One advantage of a community-based nonprofit type of corporation is

Accepted Answer

The answer of One advantage of a community-based nonprofit type...

Question 8

Let's say, Habitat for Humanity, a community-based nonprofit, this year had a surplus of money in that they did not spend all of the money that had raised this year. Which statement below is correct?

Accepted Answer

As a nonprofit organization, Habitat for Humanity would reinvest any surplus funds into its mission-related activities rather than distributing profits to shareholders or paying bonuses to board members and officers. Nonprofits aim to further their social or charitable mission with any excess funds.

Question 9

A new type of business that requires its board and officers to consider the impact their decisions have on shareholders, society and the environment are called

Accepted Answer

Benefit corporations are a type of business that legally requires their board and officers to consider the impact of their decisions not only on shareholders but also on society and the environment. This structure allows businesses to pursue both profit and purpose.

Question 10

Because of the increased effort for businesses to create a Code of Conduct and a Code of ethics for business decisions

Accepted Answer

Creating a Code of Conduct and a Code of Ethics does not simplify the complexity of ethical dilemmas; these dilemmas often remain complex with no clear ethical choice, despite the guidance provided by such codes.

Question 11

In the example of MF Global case study, according the a House of Representatives report, John Corzine created an environment in the company

Accepted Answer

John Corzine, as reported by the House of Representatives, fostered an environment at MF Global where his decisions were not open to challenge. This created a culture that hindered the effective monitoring of conduct within the company, contributing to its downfall.

Question 12

An ethical vision to guide the decision and behavior of a business's employees and managers is called

Accepted Answer

A code of ethics is a set of principles and guidelines designed to help professionals conduct business honestly and with integrity, serving as an ethical vision for decision-making and behavior within an organization.

Question 13

Mason, an employee at Campbell Corporation, witnesses Bayden, a fellow coworker taking bribes and gifts from clients in violation of their company's code of ethics, conflicts of interest clause. Mason does not report him as he is a very good friend of his. Which statement below is correct for an effective values management program?

Accepted Answer

An effective values management program requires all employees to report violations of law or the company's code of ethics to ensure accountability and integrity within the organization.

Question 14

What is name of the company wherein several employees created millions of unauthorized bank and credit card accounts in clients' names without their consent or notice to boost the employees' sales figures?

Accepted Answer

The company where employees created millions of unauthorized accounts is Wells Fargo. This scandal came to light in 2016, revealing that employees had opened these accounts to meet sales targets.

Question 15

To deal with the often complex and time-consuming matters of ethical decision making, Kania Corporation created a separate unit staffed by lawyers and non-lawyers to help it follow rules and regulations and maintain the company's culture of values and ethics. This is known as a(n)

Accepted Answer

The description fits the role of a Compliance Department, which is designed to ensure a company adheres to legal standards and internal policies, particularly in the realm of ethics and values.

Question 16

Bundy's Bicycle Corporation, a U.S. corporation, had a windfall year in profits and is looking for legal loopholes to avoid paying taxes on it massive profit. To avoid taxes Bundy's merges with a foreign business, simply to avoid paying for taxes in a process called

Accepted Answer

Corporate inversion is a strategy where a U.S. corporation merges with a foreign company to move its tax domicile to a country with lower tax rates, effectively reducing its tax burden in the United States.

Question 17

Corporate inversion, while legal, is often criticized by many as being unethical because:

Accepted Answer

Corporate inversion is criticized because it allows companies to avoid paying U.S. taxes by relocating their headquarters to a country with lower tax rates, which can deprive society of revenue needed for public services.

Question 18

Which legal philosopher asserted that natural law is asserted by God, that it is authoritative over all human beings and it is knowable through the use of reason?

Accepted Answer

Thomas Aquinas is known for his assertion that natural law is divinely instituted, authoritative over all humans, and discoverable through reason. This is a central aspect of his philosophical and theological work, particularly in the Summa Theologica.

Question 19

Which type of legal theory ethics states that if people negotiate from a veil of ignorance people will negotiate ethical principles that are fair to all?

Accepted Answer

Contracts-based ethics, particularly as described by John Rawls' theory of justice, posits that ethical principles should be determined as if individuals were negotiating from behind a "veil of ignorance," ensuring fairness and impartiality in the principles agreed upon.

Question 20

Jerry, in making his business decisions always attempts to determine what will make the greatest number of people happy and least number of people hurt. Therefore, with that in mind, he fires the senior most employee, Reid, at his business only because he makes the most money. Jerry then takes Reid's salary and divides it up between the remaining 20 people. All 20 people are thrilled with their raises, but Reid obviously is not. What type of Ethical Decision-Making Regime does this most closely represent?

Accepted Answer

Jerry's decision-making process is focused on the outcomes of his actions, specifically aiming to maximize happiness for the greatest number of people and minimize harm. This approach aligns with consequence-based ethics, also known as utilitarianism, which evaluates the morality of an action based on its consequences.

Quiz 2: Business, Societal, and Ethical Contexts of Law