Deck 10: Leading an Ethical Organization: Corporate Governance, Corporate Ethics, and Social Responsibility

Question 1

Leveraged buyouts are historically associated with reduction in workforces in an effort to streamline processes and decrease costs.

Answer 1

True

Question 2

An unsolicited takeover attempt is often dubbed a hostile takeover.

Answer 2

True

Question 3

Shark repellants are potential defenses against CEO duality.

Answer 3

False

Question 4

CEO pay is a function of a day's work for a day's pay.

Question 5

CEO duality is a situation where a single individual acts as both the CEO and the chairman of the board of directors of an organization.

Question 6

In most publicly traded firms, CEO compensation generally includes guaranteed salary, cash bonuses, and stock options.

Question 7

In Kohlberg's Stage five of moral reasoning, individuals focus on the direct consequences their actions will have.

Question 8

Individuals or firms that hope to conduct a takeover are often referred to as corporate raiders.

Question 9

In Kohlberg's pre-conventional level of moral reasoning, morality is judged by comparing individuals' actions with the expectations of society.

Question 10

The board of directors has the power to hire or fire a CEO.

Question 11

Many institutional investors, such as mutual funds and pension funds, often prefer significant representation by board insiders in the board of directors.

Question 12

A leveraged buyout happens when the management of a company threatens to sell additional stock to existing shareholders, increasing the shares needed for a viable takeover.

Question 13

The term perks, derived from perquisite, refers to special privileges or rights as a function of one's position.

Question 14

Taking a poison pill refers to a potential takeover firm selling additional stocks to existing shareholders, increasing the shares needed for a viable takeover.

Question 15

Greenmail refers to a corporate raider purchasing large blocks of stock at a premium to execute a takeover.

Question 16

A white knight is an alternative buyer of a potential takeover target, who is more favorable to the existing management of the target firm.

Question 17

A golden parachute refers to a lucrative financial incentive for the newly appointed executives of a firm that's been taken over.

Question 18

An agency problem reflects the separation of interest between the board of directors of a company and its employees.

Question 19

CEOs often favor the use of board insiders who typically have intimate knowledge of the firm's business affairs.

Question 20

CEO compensation is a function of the competitive wages that other corporations would offer for a potential CEO's services.

Question 21

Hindsight bias occurs when mistakes seem obvious after they have already occurred.

Question 22

The fundamental attribution error occurs when more readily available information is incorrectly assessed to also be more likely.

Question 23

In Kohlberg's stage five, moral reasoning is based on universal ethical principles.

Question 24

In Kohlberg's Stage three of moral reasoning, the importance of obeying laws, social conventions, or other forms of authority to aid in the maintenance of a functional society is encouraged.

Question 25

Individuals or firms that hope to conduct a takeover are often referred to as _____.

A) corporate raiders
B) corporate sharks
C) white knights
D) greenmailers
E) green pirates

Question 26

In Kohlberg's Stage two of moral reasoning, individuals are conformity driven and act with the goal of fulfilling social roles.

Question 27

The interests of the individuals that manage the company (agents such as the CEO) may not align with the interest of the owners (such as stockholders). This separation of interest creates a(n) _____.

A) agency problem
B) bricolage issue
C) arbitration divide
D) blue ocean gap
E) execution limit

Question 28

In Kohlberg's Stage two of moral reasoning, right or wrong is defined by the reward stage, where a 'what's in it for me' mentality is seen.

Question 29

An unsolicited takeover attempt is often dubbed a _____.

A) shark takeover
B) corporate raid
C) leveraged buyout
D) hostile takeover
E) white knight takeover

Question 30

Within American firms, the average CEO is paid over ____times what the typical worker makes -one of the highest ratios in the world.

A) 100
B) 150
C) 200
D) 250
E) 300

Question 31

Which of the following are roles that board members fill?

A) Accountant
B) Advisor
C) Activist
D) Agent
E) All of the above

Question 32

Kohlberg's post-conventional level of moral reasoning occurs when morality is more than simply following social rules or norms.

Question 33

Kohlberg's stage five of moral reasoning considers different values and opinions.

Question 34

A(n) _____ refers to a situation where a publicly traded company is purchased and then taken off the stock market.

A) insider takeover
B) market delisting
C) outsider takeover
D) leveraged buyout
E) premium purchase

Question 35

To avoid delivering an unpleasant message to the CEO, an employee frames the information in a more positive light than reality. This is an example of overconfidence bias.

Question 36

Who, among the following, has the power to potentially hire or fire the CEO of a publicly traded firm?

A) The federal government
B) Shareholders of the firm
C) The Secretary of State
D) Stakeholders of the firm
E) The board of directors

Question 37

Kohlberg's conventional level of moral reasoning is very egocentric in nature, and moral reasoning is tied to personal concerns.

Question 38

Making the workplace an enjoyable environment is key to managing Generation Y employees.

Question 39

Which of the following statements is true regarding the composition of the board of directors?

A) CEOs often favor significant representation by board outsiders.
B) Institutional investors favor people who have intimate knowledge of the firm's business affairs.
C) Making the CEO the chairman of the board of directors helps avoid bitter divide within a corporation.
D) CEOs often favor the use of people who have intimate knowledge of the firm's business affairs.
E) Significant representation by board outsiders increases the potential for CEO duality.

Question 40

Anchoring and adjustment bias occur when individuals react to arbitrary or irrelevant numbers when setting financial or other numerical targets.

Question 41

In Kohlberg's _____ level of moral reasoning, morality is judged by comparing individuals' actions with the expectations of society.

A) post-conventional
B) pre-operational
C) conventional
D) pre-conventional
E) post-operational

Question 42

Which of the following refers to a lucrative financial settlement given to existing executives of a taken over firm?

A) Greenmail
B) A white knight settlement
C) A poison pill
D) A golden parachute
E) A leveraged defense

Question 43

In Kohlberg's stage five of moral reasoning:

A) individuals focus on the direct consequences that their actions will have.
B) individuals exhibit a 'what's in it for me' mentality.
C) individuals are conformity-driven and act with the goal of fulfilling social roles.
D) individuals obey laws, social conventions, or other forms of authority to aid in the maintenance of a functional society.
E) individuals view laws as social contracts that promote the greatest good for the greatest number of people.

Question 44

Which of the following is true about a golden parachute?

A) It refers to the potential defenses against a hostile takeover attempt.
B) It refers to an unsolicited takeover attempt.
C) It refers to a takeover target firm's management repurchasing large blocks of stocks at a premium to avoid a potential takeover.
D) It refers to a takeover target firm selling additional stock to existing shareholders, increasing the shares needed for a viable takeover.
E) It refers to a lucrative financial settlement given to exiting executives of a taken-over firm.

Question 45

Yellow Brick House Inc. manufactures and distributes expertly crafted home furniture. The firm has notable union relations and positive health and safety programs for its workers. The employees are also provided with good pension plans. This indicates that KLD would score Yellow Brick House Inc. positively in the _____ dimension of CSP.

A) community dimension
B) diversity dimension
C) corporate governance dimension
D) product safety dimension
E) employee relations dimension

Question 46

According to Kohlberg, in which of the following stages of moral reasoning is the importance of obeying laws, social conventions, or other forms of authority to aid in the maintenance of a functional society encouraged?

A) Stage one
B) Stage two
C) Stage three
D) Stage four
E) Stage five

Question 47

In-tatters, Inc. manufactures customized T-shirts for teens. It regularly engages in charitable and innovative giving that supports housing, education, and relations with indigenous peoples. Which of the following dimensions of corporate social performance (CSP) will be assessed positively by KLD for In-tatters?

A) The community dimension
B) The diversity dimension
C) The corporate governance dimension
D) The product quality/safety dimension
E) The employee relations dimension

Question 48

According to Kohlberg, _____ level of moral reasoning is very egocentric in nature.

A) post-operational
B) sub-conventional
C) conventional
D) pre-conventional
E) pre-operational

Question 49

According to Kohlberg, _____ level of moral reasoning occurs when morality is more than simply following social rules or norms.

A) post-conventional
B) pre-operational
C) conventional
D) pre-conventional
E) operational

Question 50

Tiny Toys Inc. manufactures a range of toy cars for children. The firm has poor union relations and has repeatedly paid fines due to violations of health and safety standards. This indicates that KLD would score Tine Toys Inc. negatively in the _____ dimension of CSP.

A) community dimension
B) diversity dimension
C) corporate governance dimension
D) product quality/safety dimension
E) employee relations dimension

Question 51

Which of the following refers to a takeover target firm selling additional stock to existing shareholders, increasing the shares needed for a viable takeover?

A) Greenmail
B) A poison pill
C) A white knight
D) A leveraged defense
E) A golden parachute

Question 52

According to Kohlberg, in which of the following stages is moral reasoning based on universal ethical principles?

A) Stage one
B) Stage two
C) Stage six
D) Stage four
E) Stage five

Question 53

Asset Inc., a management consultancy firm, actively pursues the policy of employing the disabled. The firm ensures that all its office buildings are disabled-friendly. This indicates that KLD would score Asset Inc. positively in the _____ dimension of CSP.

A) The community dimension
B) The diversity dimension
C) The corporate governance dimension
D) The environmental dimension
E) The employee relations dimension

Question 54

Which of the following is true about greenmail?

A) It refers to an unsolicited takeover attempt.
B) It refers to a potential buyer who is favorable to the existing management of a takeover target firm.
C) It refers to a takeover target firm's management repurchasing large blocks of stocks at a premium to avoid a potential takeover.
D) It refers to a takeover target firm selling additional stock to existing shareholders, increasing the shares needed for a viable takeover.
E) It refers to a lucrative financial settlement given to exiting executives of a taken over firm.

Question 55

A potential buyer who is favorable to the existing management of a takeover target firm is known as a _____.

A) corporate raider
B) greenmailer
C) white knight
D) corporate shark
E) green pirate

Question 56

Which of the following is true about a shark repellent?

A) It refers to the potential defenses against a hostile takeover attempt.
B) It refers to a potential buyer who is favorable to the existing management of a takeover target firm.
C) It refers to a takeover target firm's management repurchasing large blocks of stocks at a premium to avoid a potential takeover.
D) It refers to a takeover target firm selling additional stock to existing shareholders, increasing the shares needed for a viable takeover.
E) It refers to a lucrative financial settlement given to exiting executives of a taken over firm.

Question 57

In Kohlberg's stage three of moral reasoning:

A) individuals focus on the direct consequences that their actions will have.
B) individuals exhibit a 'what's in it for me' mentality.
C) individuals are conformity-driven and act with the goal of fulfilling social roles.
D) individuals obey laws, social conventions, or other forms of authority to aid in the maintenance of a functional society.
E) individuals are viewed as social contracts that promote the greatest good for the greatest number of people.

Question 58

Clifford International Group is an American multinational insurance corporation. A mandatory survey by the government revealed that there were very few women in top management positions - suggesting that a glass ceiling is present at the company. Based on this information, which of the following dimensions of corporate social performance (CSP) will be assessed negatively by KLD for Clifford International Group?

A) The community dimension
B) The diversity dimension
C) The corporate governance dimension
D) The product quality/safety dimension
E) The employee relations dimension

Question 59

In Kohlberg's stage one of moral reasoning:

A) individuals focus on the direct consequences that their actions will have.
B) individuals exhibit a 'what's in it for me' mentality.
C) individuals are conformity-driven and act with the goal of fulfilling social roles.
D) individuals understand the importance of obeying forms of authority to aid in the maintenance of a functional society.
E) laws are viewed as social contracts that promote the greatest good for the greatest number of people.

Question 60

According to Kohlberg, in which of the following stages of moral reasoning individuals exhibit a 'what's in it for me' mentality?

A) Stage one
B) Stage two
C) Stage three
D) Stage four
E) Stage five

Question 61

The generation known as _____ was born between 1946-1964, corresponding with an increase of population following the end of World War II.

A) traditionalists
B) baby boomers
C) conservatives
D) Generation X
E) Generation Y

Question 62

Andrew, a stock broker at a leading investment firm, often recommends his clients to invest in stocks based on a few observations. Andrew relies on his instincts to make such decisions rather than basing his decisions on reliable sources of information and careful number crunching. In this example, Andrew makes which of the following decision biases?

A) Escalation of commitment
B) Fundamental attribution error
C) Misunderstandings about sampling
D) Availability bias
E) Judgments about correlation and casualty

Question 63

What generation is viewed as needing more feedback in the workplace than previous groups?

A) Traditionalists
B) Baby boomers
C) Generation X
D) Millennials
E) Generation V

Question 64

Which of the following is true about the fundamental attribution error?

A) It occurs when individuals react to arbitrary or irrelevant numbers when setting financial or other numerical targets.
B) It occurs when information that is readily available is incorrectly assessed to also be more likely.
C) It occurs when good outcomes are attributed to personal characteristics, but undesirable outcomes are attributed to external circumstances.
D) It occurs when mistakes seem obvious after they have already occurred.
E) It occurs when individuals are more confident in their abilities to predict an event than logic suggests is actually possible.

Question 65

Which of the following decision biases is displayed by individuals who continue on a failing course of action even after it becomes clear that it may be a poor path to follow?

A) Escalation of commitment
B) Availability bias
C) Fundamental attribution error
D) Judgments about correlation and casualty
E) Anchoring and adjustment bias

Question 66

Ruth is the store manager at Pink & Blue, a store that sells children's clothing and baby care products. Whenever the sales are high at the store, Ruth feels that it is because she manages the store efficiently. When the sale drops and there are instances of customer dissatisfaction, she decides that it is caused by the inefficiency of her sales staff. In this example, Ruth exhibits which of the following decision biases?

A) Escalation of commitment
B) Fundamental attribution error
C) Availability bias
D) Judgments about correlation and casualty
E) Anchoring and adjustment bias

Question 67

Which of the following is true about the availability bias?

A) It occurs when individuals react to arbitrary or irrelevant numbers when setting financial or other numerical targets.
B) It occurs when information that is readily available is incorrectly assessed to also be more likely.
C) It occurs when good outcomes are attributed to personal characteristics, but undesirable outcomes are attributed to external circumstances.
D) It occurs when mistakes seem obvious after they have already occurred.
E) It occurs when individuals are more confident in their abilities to predict an event than logic suggests is actually possible.

Question 68

What is a secondary nickname for Generation Z?

A) Techno-savvy elite
B) Homeland Generation
C) Trophy Kids
D) Millennial wannabes
E) Selfie Generation

Question 69

Which of the following is the first step of the process of rational decision-making?

A) Establishment and weighing of decision criteria
B) Decision evaluation
C) Generation and evaluation of alternatives
D) Problem identification
E) Selection of the best alternative

Question 70

Which of the following is true about Gen X members?

A) They view face time as an important contribution to a successful work environment.
B) They prize flexibility in their jobs.
C) They were born between 1925 and 1946, and fought in World War II.
D) They like being micro-managed.
E) They are resistant to change.

Question 71

According to KLD, which of the following dimensions of corporate social performance will be assessed positively if a firm is committed to recycling waste and using alternative energies?

A) The community dimension
B) The environment dimension
C) The corporate governance dimension
D) The product quality/safety dimension
E) The employee relations dimension

Question 72

Which of the following decision biases may occur when individuals draw broad conclusions from small sets of observations instead of more reliable sources of information derived from large, randomly selected sets of observations?

A) Escalation of commitment
B) Overconfidence bias
C) Fundamental attribution error
D) Judgments about correlation and casualty
E) Misunderstandings about sampling

Question 73

Which of the following is true about the overconfidence bias?

A) It occurs when individuals react to arbitrary or irrelevant numbers when setting financial or other numerical targets.
B) It occurs when information that is readily available is incorrectly assessed to also be more likely.
C) It occurs when good outcomes are attributed to personal characteristics, but undesirable outcomes are attributed to external circumstances.
D) It occurs when mistakes seem obvious after they have already occurred.
E) It occurs when individuals have more faith in their abilities to predict an event than logic suggests is actually possible.

Question 74

The generation born between 1925 and 1946 that fought in World War II and through The Great Depression are referred to as:

A) traditionalists.
B) baby boomers.
C) conservatives.
D) Generation X.
E) Generation Y.

Question 75

As of 2015, What generation makes up the largest share of the U.S. workforce?

A) Traditionalists
B) Baby boomers
C) Generation X
D) Millennials
E) Generation Y

Question 76

Which of the following groups is comprised of Millenials?

A) Traditionalists
B) Baby boomers
C) Conservatives
D) Generation X
E) Generation Y

Question 77

Generation X differs from the baby boomers in that Generation X members:

A) prize flexibility in their jobs.
B) like the feeling that they are being micro-managed.
C) view face time as an important contribution to a successful work environment.
D) makes up the majority of the workforce.
E) are marked by a resistance to change.

Question 78

Which of the following is a defining characteristic of the members of the baby boomers generation?

A) They view face time as an important contribution to a successful work environment.
B) They now make up roughly five percent of the work force.
C) They were born between 1925 and 1946 and fought in World War II.
D) They dislike being micro-managed.
E) They are resistant to change.

Question 79

More than any other generation, _____ prize(s) job and life satisfaction highly, so making the workplace an enjoyable environment is key to managing them.

A) traditionalists
B) baby boomers
C) conservatives
D) Generation X
E) Generation Y

Question 80

According to KLD, which of the following dimensions of corporate social performance will be assessed negatively for a firm that has been engaged in questionable marketing practices, paid fines related to antitrust practices, and been accused of price fixing?

A) The environmental dimension
B) The diversity dimension
C) The corporate governance dimension
D) The product quality/safety dimension
E) The employee relations dimension