Question 1

Which of the following unethical behaviors violates the rights of competitors and, when government officials are involved, the right of citizens to expect that government officials will act in the best interests of the local community or nation?

Accepted Answer

Corruption involves an abuse of power by government officials for private gain, which violates the rights of competitors and citizens who expect officials to act in the best interests of the community or nation. Information asymmetry, utilitarianism, self-dealing, and greenmail may be unethical, but they do not necessarily violate the rights of competitors or citizens in the same way that corruption does.

Question 2

Business ethics are concerned with accepted principles of right or wrong governing the conduct of businesspeople. Identify and discuss the common examples of unethical decisions that businesspeople have made.

Accepted Answer

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Question 3

To make sure that ethical issues are considered in business decisions:

Accepted Answer

Top managers play a crucial role in setting the ethical tone and culture of the organization. They should not only articulate ethical values but also model them in their own behavior. This creates a sense of moral responsibility for all employees and helps in ensuring ethical decision-making. Eliminating the principal-agent approach, having a no-layoff policy, granting stock options or hiring/promoting employees based on economic gains do not necessarily guarantee ethical decision-making.

Question 4

Describe the four types of governance mechanisms that principals use to deal with agency problems.

Accepted Answer

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Question 5

Explain the principles of agency theory, including the issues it addresses. What are some effective ways to deal with agency problems, as implied or stated by agency theory?

Accepted Answer

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Question 6

Consider a national chain of company-owned fast-food restaurants. For this firm, list the important stakeholders. Then describe how each stakeholder group can affect the firm's profitability.

Accepted Answer

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Question 7

Requiring an independent board of directors that is willing to hold top managers accountable for self-dealing and can verify the information managers provide is an example of which kind of ethical principle?

Accepted Answer

Requiring an independent board of directors is an example of strong corporate governance, which focuses on ensuring sound and ethical management practices are in place to promote transparency, accountability, and trust.

Question 8

What is the best way for managers to ensure that ethical considerations are taken into account? List five out of the seven things managers can and should do to ensure that basic ethical principles are adhered to, and that ethical issues are routinely considered when making business decisions. Describe at least one way to accomplish each of these tasks.

Accepted Answer

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Question 9

Which of the following types of business law describes the accepted principles of right and wrong when dealing with competitive behavior?

Accepted Answer

Antitrust laws deal with promoting fair competition, preventing monopolies and regulating mergers and acquisitions to make sure they don't harm competition. Therefore, antitrust laws describe the accepted principles of right and wrong when dealing with competitive behavior.

Question 10

When managers of a firm seek to unilaterally rewrite the terms of contracts with suppliers, buyers, or complement providers in a way that is more favorable to their firm, they are engaging in:

Accepted Answer

Opportunistic exploitation refers to taking advantage of imbalances in bargaining power to rewrite the terms of contracts in one's own favor without the consent of the other party. This is a form of unethical behavior that undermines trust and can harm long-term relationships with suppliers, buyers, or complement providers. Information manipulation refers to distorting or withholding information to gain an advantage in negotiations. Downsizing refers to reducing the size of a company's workforce or operations to cut costs. Greenmail refers to the practice of buying enough shares in a company to threaten a hostile takeover and then demanding a premium in exchange for not pursuing the takeover. Self-dealing refers to using one's position for personal gain rather than for the benefit of the organization.

Quiz 11: Corporate Governance, Social Responsibility, and Ethics