Question 1

According to stakeholder theory,_ .&#10;A)stakeholders invest the most capital in a corporation&#10;B)a company ought to be run to the benefit of everyone involved in it&#10;C)everyone involved in a company should be treated as shareholders&#10;D)ownership of a company should be divided among all stakeholders

Accepted Answer

According to stakeholder theory, a company should be run in a way that benefits not just the shareholders, but all stakeholders involved in the company, including employees, customers, suppliers, and the community. The focus is on creating value for all stakeholders, not just maximizing profits for shareholders. Therefore, choice B is the best answer as it captures the essence of stakeholder theory.

Question 2

Accountants,Inc.wishes to expand its accounting practice to include both consulting and auditing services.Which aspect of its strategy should be examined more closely?&#10;A)The accounting firm has failed to take into account that auditing is more lucrative than consulting.&#10;B)Hiring an accounting firm for consultation can be problematic because it is not a widely accepted business practice.&#10;C)CPAs are not qualified to give advice beyond accounting and financial matters.&#10;D)Conflicts of interest are likely to arise from offering both services to one client.

Accepted Answer

Offering both consulting and auditing services to the same client can create conflicts of interest. This can potentially harm the integrity of the accounting firm and lead to legal and ethical issues. It's important for the firm to carefully consider how to manage potential conflicts and establish clear boundaries between the two services.

Question 3

Unethical business conduct usually arises from .&#10;A)ignorance of the law&#10;B)unscrupulous individuals acting alone&#10;C)attempts to cheat shareholders of their dividends&#10;D)the way that an organization as a whole operates

Accepted Answer

Unethical business conduct often arises from the culture and practices within the organization as a whole, rather than just the actions of individual employees. This can include a lack of ethical leadership or a focus solely on profits over ethical behavior.

Question 4

Although ABC Corporation has a comprehensive ethics program,several of its employees have been charged with financial fraud.If ABC is subsequently convicted of the crime and sentenced under the Federal Sentencing Guidelines,it can expect .

A)strict sanctions without the possibility of leniency
B)lenient sanctions because it has a comprehensive ethics program
C)standard sanctions regardless of its comprehensive ethics program
D)reassurance of no sanctions because it has a comprehensive ethics program

Accepted Answer

Under the Federal Sentencing Guidelines, organizations with effective ethics and compliance programs in place at the time of the offense may qualify for reduced penalties. Therefore, if ABC Corporation has a comprehensive ethics program, it may receive lenient sanctions despite the charges.

Question 5

Shareholders have governance over a company in return for .&#10;A)influence&#10;B)capital&#10;C)prestige&#10;D)advertising

Accepted Answer

Shareholders typically invest capital in a company in exchange for ownership and therefore have governance over the company. They have the right to vote on important decisions such as the election of the board of directors and major business decisions. In exchange for their investment, they also expect to potentially receive profits in the form of dividends or an increase in share price.

Question 6

Although Electronics,Inc.has a code of ethics for its subcontractors,it has experienced issues with its government contracts.Several subcontractors have been embroiled in scandals involving unethical conduct.Most recently,a subcontractor falsified thousands of dollars in work orders.If Electronics,Inc.wants to show the government that it is serious about preventing unethical conduct,it should .

A)educate subcontractors about its expectations and monitor them for compliance
B)emphasize that it bears little responsibility for the subcontractor's behavior because the subcontractor is not an employee by law
C)warn subcontractors about the perils of getting caught
D)provide proof of its code of ethics which prohibits unethical conduct

Accepted Answer

The best way for Electronics, Inc. to show the government that it is serious about preventing unethical conduct is by educating its subcontractors about its expectations and monitoring them for compliance. This shows that the company is taking proactive steps to prevent unethical behavior rather than simply providing a code of ethics and hoping that subcontractors will comply.

Question 7

Adolf Berle argued against public responsibility of a corporation on the basis of .&#10;A)the rights of stakeholders&#10;B)limiting the power of shareholders&#10;C)excessive managerial power&#10;D)corporations' impact on society

Accepted Answer

Adolf Berle argued against the idea that corporations have a public responsibility on the basis of excessive managerial power. He was concerned that managers, who were not owners, had too much control over the companies and their operations, which could lead to decisions not in the best interest of the shareholders.

Question 8

The central argument for shareholder control of a company states that .&#10;A)companies without shareholders are not likely to be profitable&#10;B)shareholders have the most to lose in their company involvement&#10;C)shareholders are more likely than management to operate a company profitably&#10;D)management can only control a company insofar as they are paid by it

Accepted Answer

Shareholders have a direct financial stake in the company, making them inherently motivated to see the company succeed, as their investments are directly at risk. This contrasts with management, whose personal financial stakes might not be as directly tied to the company's performance.

Question 9

An effective corporate ethics program should include .&#10;A)standards that have been communicated to all levels&#10;B)oversight given to a few individuals&#10;C)training in all of the relevant laws&#10;D)reporting of all procedures to the public

Accepted Answer

An effective corporate ethics program should have clear standards that have been communicated to all levels of the organization. This ensures that everyone understands what is expected of them and can act accordingly. Oversight given to a few individuals can lead to power imbalances and potential abuses of authority. While training in relevant laws is important, it should not be the only focus of an ethics program. Reporting all procedures to the public may not be necessary, but transparency within the organization is essential.

Question 10

The property rights theory of corporations has it that incorporation .&#10;A)is a general aspect of ownership&#10;B)is a matter of owning enough capital&#10;C)should be accompanied by rules&#10;D)is anyone's right

Accepted Answer

The answer of The property rights theory of corporations has...

Deck 13: Governance, Accountability, and Compliance