Question 1

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

Accepted Answer

AIG had little money on hand at the time of the collapse, so the bonuses came from the bailout money.

Question 2

The categorical imperative test consists of:

Accepted Answer

The categorical imperative test consists of individuals making ethical decisions with an eye toward potential consequences if everyone in society acted similarly.

Question 3

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. The company 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?

Accepted Answer

Tony, while not directly linked to Mighty Motors, will be harmed due to loss of business in an indirect manner. Mike has no direct or indirect link to Mighty Motors.

Question 4

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

Accepted Answer

Jeffrey Skilling chose to testify and claimed that the company was in good shape at the time of his resignation.

Question 5

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

Accepted Answer

The universalization approach, which stems from the categorical imperative, asks this question.

Question 6

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.

Accepted Answer

A conflict of interest would make her actions ethically questionable even if no distinct right or wrong action can be determined.

Question 7

The moderate view of assessing corporate citizenship holds that:

Accepted Answer

The moderate view of assessing corporate citizenship holds that the government should provide the exclusive view of corporate responsibility.

Question 8

The utilitarian approach to moral philosophy was founded by:

Accepted Answer

The founder of utilitarianism was 18th-century philosopher Jeremy Bentham.

Question 9

KAM Corp. has separate codes of ethics and conduct. Each of the following would likely be included in its code of ethics except:

Accepted Answer

Avoidance of conflicts of interest is a matter for a code of conduct.

Question 10

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?

Accepted Answer

The broad view, or management's hand theory, holds that profits are secondary to establishing proper corporate social responsibility.

Question 11

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?

Accepted Answer

Nearly $50 million was returned by AIG executives.

Question 12

Modern Corporation operates a steel mill. It has never contributed anything to the local community, and it knowingly pollutes both the air and the river that runs by its mill. The corporation's reasoning is that the cost of installing pollution control devices would diminish its profits, and it doesn't support the community because it provides jobs and doesn't think it owes anything else to the citizens in its area. Donating to the community would also diminish profits. Which theory of corporate social responsibility is Modern Corporation exhibiting?

Accepted Answer

The narrow view, or invisible hand theory, holds that producing profit is more important than being socially responsible.

Question 13

Arthur Andersen was:

Accepted Answer

Arthur Andersen was Enron's long-time auditing firm.

Question 14

AIG received a government bailout to save the company because:

Accepted Answer

AIG was deemed to be too important to the financial infrastructure of the United States to be allowed to fail.

Question 15

Nobel Prize-winning economist Milton Friedman believed that:

Accepted Answer

Milton Friedman believed in Adam Smith's theories and felt that the only responsibility a business has is to maximize shareholder wealth.

Question 16

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 not only are to be legal but should be based on what is best for the consumer. Everyone who deals with a customer is responsible for what he or she advises and must document conversations. Promotions and rewards will be based not only on 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 that 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?

Accepted Answer

Ethical organizations must have all policies and procedures of each segment of the company aligned with the company's stated vision.

Question 17

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 it will accept returns for 30 days as long as the price tag is still attached.

Accepted Answer

This is not an act that is generally accepted or condoned in society, so it is immoral and unethical.

Question 18

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

Accepted Answer

Enron Corporation was a multinational conglomerate with a core business of energy trading.

Question 19

In Arthur Andersen LLP v. United States, Andersen's previous conviction was overturned by the Supreme Court because it was determined that:

Accepted Answer

The jury instructions did not emphasize, as required by the statute being enforced, that the company had to have known that it was breaking the law.

Question 20

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?

Accepted Answer

Residents near airports have no actual connection to Sky High, either direct or indirect.

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