Question 1

Describe the role of inside directors as part of a company's board of directors.

Accepted Answer

Inside directors are generally part of t

Question 2

What do we call the board members who are part of a company's senior management team appointed by shareholders to provide the board with necessary information pertaining to the company's internal workings and performance?

Accepted Answer

A)  investors 
B)  outside directors 
C)  inside directors 
D)  auditors 
A)  investors 
B)  outside directors 
C)  inside directors 
D)  auditors

Question 3

Sanjaya was recently hired at an up-and-coming firm that has a history of ethics violations. Which action is best for him to take if he wants to determine whether the firm is now acting ethically?

Accepted Answer

A)  Observe executives at the company, and see whether they model ethical behavior and demand it of others. 
B)  Research the results of the ethics violations. If the perpetrators were fired or jailed, then the rest of the company is sound. 
C)  Check the company's mission statement to make sure that it guarantees respect and integrity. 
D)  Ignore the alleged ethics violations because there is no one standard of ethical behavior. 
A)  Observe executives at the company, and see whether they model ethical behavior and demand it of others. 
B)  Research the results of the ethics violations. If the perpetrators were fired or jailed, then the rest of the company is sound. 
C)  Check the company's mission statement to make sure that it guarantees respect and integrity. 
D)  Ignore the alleged ethics violations because there is no one standard of ethical behavior.

Question 4

It can be difficult for shareholders of publicly traded companies to determine how much money those companies are making or losing because these companies use different accounting firms, and each accounting firm follows different rules.

Accepted Answer

A) True 
 B)False

Question 5

Gino is the CEO of a financial services firm. What action should Gino take to be sure the firm avoids moral hazards?

Accepted Answer

A)  He should closely monitor the behavior and performance of new employees to be certain that they have the skills they claimed to have in interviews. 
B)  Gino must increase hiring and develop influential relationships with government officials so that his firm will be considered "too big to fail." 
C)  He must create a plan in which government agencies or a consortium of other financial services firms will assume any future debts of the company. 
D)  Gino should define undue risk-taking, institute strict auditing of loans, and make it clear that the company will fire employees who lend recklessly. 
A)  He should closely monitor the behavior and performance of new employees to be certain that they have the skills they claimed to have in interviews. 
B)  Gino must increase hiring and develop influential relationships with government officials so that his firm will be considered "too big to fail." 
C)  He must create a plan in which government agencies or a consortium of other financial services firms will assume any future debts of the company. 
D)  Gino should define undue risk-taking, institute strict auditing of loans, and make it clear that the company will fire employees who lend recklessly.

Question 6

Stella accepts a job as vice president for human resources at a technology startup. She discovers that the startup believes that teamwork is so important that it plans to award all raises and bonuses by splitting them equally within a team rather than presenting them to individual employees. What action should Stella take regarding this plan?

Accepted Answer

A)  Interview new candidates extensively to avoid adverse selection. 
B)  Expand the plan by allowing teams to make hiring decisions and eventually firing decisions as well. 
C)  Make sure the plan goes into place only after the company has corrected information asymmetry. 
D)  Cancel the plan because under it, opportunistic employees will do little or no work. 
A)  Interview new candidates extensively to avoid adverse selection. 
B)  Expand the plan by allowing teams to make hiring decisions and eventually firing decisions as well. 
C)  Make sure the plan goes into place only after the company has corrected information asymmetry. 
D)  Cancel the plan because under it, opportunistic employees will do little or no work.

Question 7

How does GE exemplify the creation of a shared value creation framework?

Accepted Answer

The shared value creation framework prop

Question 8

What helps notions such as fairness, honesty, and reciprocity to be codified into law?

Accepted Answer

A)  The notions are synonymous with law. 
B)  The notions differ to some degree in different cultures around the globe. 
C)  The notions are universal norms. 
D)  The notions are characteristics inherited by each person irrespective of the culture. 
A)  The notions are synonymous with law. 
B)  The notions differ to some degree in different cultures around the globe. 
C)  The notions are universal norms. 
D)  The notions are characteristics inherited by each person irrespective of the culture.

Question 9

GameGo is a publicly traded manufacturer of home electronics. Based on what you have read, which of these actions would be wisest for GameGo's board of directors to take to be sure that the company's new CEO is as motivated as possible?

Accepted Answer

A)  Encourage the CEO to take all of her compensations in stock options, which will motivate her to keep the stock price high. 
B)  Offer the largest bonus possible to prevent the CEO from leaving to go a rival firm. 
C)  Link the CEO's pay to her performance, but avoid high-powered incentives that may cause reckless behavior. 
D)  Encourage her to emulate Warren Buffett and to take a lower salary than she might command elsewhere. 
A)  Encourage the CEO to take all of her compensations in stock options, which will motivate her to keep the stock price high. 
B)  Offer the largest bonus possible to prevent the CEO from leaving to go a rival firm. 
C)  Link the CEO's pay to her performance, but avoid high-powered incentives that may cause reckless behavior. 
D)  Encourage her to emulate Warren Buffett and to take a lower salary than she might command elsewhere.

Question 10

Grameen Bank in Bangladesh was founded to provide microcredit to impoverished farmers who wanted to start their own entrepreneurial ventures that would help themselves climb out of poverty. This best exemplifies Michael Porter's suggestion that

Accepted Answer

A)  managers need to keep economic needs and societal needs disconnected from each other. 
B)  a firm should expand its internal value chain to include nontraditional partners. 
C)  businesses should focus on creating regional clusters such as Silicon Valley in the U.S. 
D)  the largest but poorest socioeconomic group can yield significant business opportunities. 
A)  managers need to keep economic needs and societal needs disconnected from each other. 
B)  a firm should expand its internal value chain to include nontraditional partners. 
C)  businesses should focus on creating regional clusters such as Silicon Valley in the U.S. 
D)  the largest but poorest socioeconomic group can yield significant business opportunities.

Question 11

According to the agency theory,

Accepted Answer

A)  conflicts that arise in corporations should be addressed in the legal realm. 
B)  corporations are more than a set of contracts between parties. 
C)  companies should focus on generating profits for stockholders. 
D)  principals and agents have interchangeable roles. 
A)  conflicts that arise in corporations should be addressed in the legal realm. 
B)  corporations are more than a set of contracts between parties. 
C)  companies should focus on generating profits for stockholders. 
D)  principals and agents have interchangeable roles.

Question 12

Sirhan is president of a medium-sized bank. What can he do to lessen the chances of employees or board members taking part in insider trading?

Accepted Answer

A)  Forbid managers and executives from having access to private information. 
B)  Forbid board members from having access to private information. 
C)  Work with analysts and customer-facing employees to root out information asymmetry. 
D)  Create a strict code of ethics and explain that inside traders will be fired. 
A)  Forbid managers and executives from having access to private information. 
B)  Forbid board members from having access to private information. 
C)  Work with analysts and customer-facing employees to root out information asymmetry. 
D)  Create a strict code of ethics and explain that inside traders will be fired.

Question 13

Gary owns shares in a company called Archibald Industries Inc. The company's financial performance has been declining over the past few months, and the value of its stock has been decreasing. Gary wants to proactively cut his losses and therefore sells his shares. Anneke, a trading enthusiast, buys shares in Archibald Industries because she believes that the share prices cannot go anywhere but up. Which of the following characteristics of a public stock company does this scenario best exemplify?

Accepted Answer

A)  separation of legal ownership and management control 
B)  legal personality 
C)  limited liability for investors 
D)  transferability of investor ownership 
A)  separation of legal ownership and management control 
B)  legal personality 
C)  limited liability for investors 
D)  transferability of investor ownership

Question 14

Ignacio Inc. is a public stock company. Which of the following statements about the company best illustrates the fact that its investors have limited liability?

Accepted Answer

A)  Employees of Ignacio are legally permitted to invest their capital in the company's stock. 
B)  Employees of Ignacio are also the owners of the company. 
C)  Shareholders of Ignacio are responsible to the company only to the capital they have invested. 
D)  Shareholders of Ignacio are not permitted to trade their company stock at the New York Stock Exchange (NYS
E) . 
A)  Employees of Ignacio are legally permitted to invest their capital in the company's stock. 
B)  Employees of Ignacio are also the owners of the company. 
C)  Shareholders of Ignacio are responsible to the company only to the capital they have invested. 
D)  Shareholders of Ignacio are not permitted to trade their company stock at the New York Stock Exchange (NYS
E) .

Question 15

Angelica is the CEO of Sandhaven Ltd., a publicly traded company. The shareholders want Angelica on the board of directors despite her recent appointment as the CEO. This decision of the shareholders is most likely because Angelica is

Accepted Answer

A)  a board member of a major client. 
B)  more likely than other board members to take care of the stockholders. 
C)  also the CEO of other companies. 
D)  likely to provide the board with valuable inside information. 
A)  a board member of a major client. 
B)  more likely than other board members to take care of the stockholders. 
C)  also the CEO of other companies. 
D)  likely to provide the board with valuable inside information.

Question 16

Which of the following best supports the fact that Goldman Sachs was unethical in the Abacus deal?

Accepted Answer

A)  It was given a "triple A" rating for Abacus even though Abacus should have gotten a low rating. 
B)  It made no effort to ascertain the stability of the real estate market, even though it had the resources and time to do so. 
C)  It knew that Paulson & Co. had bundled high-risk mortgages into the collateralized debt obligation. 
D)  It lost $100 million in the Abacus fiasco and endured negative treatment in the media. 
A)  It was given a "triple A" rating for Abacus even though Abacus should have gotten a low rating. 
B)  It made no effort to ascertain the stability of the real estate market, even though it had the resources and time to do so. 
C)  It knew that Paulson & Co. had bundled high-risk mortgages into the collateralized debt obligation. 
D)  It lost $100 million in the Abacus fiasco and endured negative treatment in the media.

Question 17

Why does Michael Porter recommend expanding the customer base of an organization in terms of the shared value creation framework?

Accepted Answer

A)  Doing so could yield significant business opportunities that could improve the standard of living of the poor. 
B)  Doing so is the best way to ensure that shareholders have the most legitimate claim on profits made by the organization. 
C)  Doing so could be the only way to meet stockholder expectations in a highly competitive market. 
D)  Doing so will help to prevent the inclusion of more nontraditional partners into internal firm value chains. 
A)  Doing so could yield significant business opportunities that could improve the standard of living of the poor. 
B)  Doing so is the best way to ensure that shareholders have the most legitimate claim on profits made by the organization. 
C)  Doing so could be the only way to meet stockholder expectations in a highly competitive market. 
D)  Doing so will help to prevent the inclusion of more nontraditional partners into internal firm value chains.

Question 18

Which of the following characteristics of a public stock company deals with principals and agents?

Accepted Answer

A)  limited liability of investors 
B)  transferability of investor ownership 
C)  separation of legal ownership and management control 
D)  legal personality 
A)  limited liability of investors 
B)  transferability of investor ownership 
C)  separation of legal ownership and management control 
D)  legal personality

Question 19

Bernard is a board member at Lopez Electronics Inc. He is also a senior executive of the firm. The board is chaired by Ernest Jones, the CEO of Stanley Motors. According to this scenario, Bernard

Accepted Answer

A)  cannot serve on the board of any other organization. 
B)  is more likely than Ernest to take care of stockholder interests. 
C)  is an inside director of Lopez Electronics. 
D)  can use information from board meetings to trade stocks of Lopez Electronics. 
A)  cannot serve on the board of any other organization. 
B)  is more likely than Ernest to take care of stockholder interests. 
C)  is an inside director of Lopez Electronics. 
D)  can use information from board meetings to trade stocks of Lopez Electronics.

Question 20

Ethics is

Accepted Answer

A)  not synonymous with law. 
B)  impossible to codify into law. 
C)  universal and cannot differ between cultures. 
D)  the minimum acceptable standard in business practice. 
A)  not synonymous with law. 
B)  impossible to codify into law. 
C)  universal and cannot differ between cultures. 
D)  the minimum acceptable standard in business practice.

Describe the role of inside directors as part of a company's board of directors.

What do we call the board members who are part of a company's senior management team appointed by shareholders to provide the board with necessary information pertaining to the company's internal workings and performance?

Sanjaya was recently hired at an up-and-coming firm that has a history of ethics violations. Which action is best for him to take if he wants to determine whether the firm is now acting ethically?

It can be difficult for shareholders of publicly traded companies to determine how much money those companies are making or losing because these companies use different accounting firms, and each accounting firm follows different rules.

Gino is the CEO of a financial services firm. What action should Gino take to be sure the firm avoids moral hazards?

How does GE exemplify the creation of a shared value creation framework?

What helps notions such as fairness, honesty, and reciprocity to be codified into law?

GameGo is a publicly traded manufacturer of home electronics. Based on what you have read, which of these actions would be wisest for GameGo's board of directors to take to be sure that the company's new CEO is as motivated as possible?

Grameen Bank in Bangladesh was founded to provide microcredit to impoverished farmers who wanted to start their own entrepreneurial ventures that would help themselves climb out of poverty. This best exemplifies Michael Porter's suggestion that

According to the agency theory,

Sirhan is president of a medium-sized bank. What can he do to lessen the chances of employees or board members taking part in insider trading?

Ignacio Inc. is a public stock company. Which of the following statements about the company best illustrates the fact that its investors have limited liability?

Angelica is the CEO of Sandhaven Ltd., a publicly traded company. The shareholders want Angelica on the board of directors despite her recent appointment as the CEO. This decision of the shareholders is most likely because Angelica is

Which of the following best supports the fact that Goldman Sachs was unethical in the Abacus deal?

Why does Michael Porter recommend expanding the customer base of an organization in terms of the shared value creation framework?

Which of the following characteristics of a public stock company deals with principals and agents?

Bernard is a board member at Lopez Electronics Inc. He is also a senior executive of the firm. The board is chaired by Ernest Jones, the CEO of Stanley Motors. According to this scenario, Bernard

Ethics is

What Is Strategy

Strategic Leadership: Managing the Strategy Process

External Analysis: Industry Structure, Competitive Forces, and Strategic Groups

Internal Analysis: Resources, Capabilities, and Core Competencies

Competitive Advantage, Firm Performance, and Business Models

Business Strategy: Differentiation, Cost Leadership, and Blue Oceans

Business Strategy: Innovation, Entrepreneurship, and Platforms

Corporate Strategy: Vertical Integration and Diversification

Corporate Strategy: Strategic Alliances, Mergers, and Acquisitions

Global Strategy: Competing Around the World

Organizational Design: Structure, Culture, and Control

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Exam 12: Corporate Governance and Business Ethics

Describe the role of inside directors as part of a company's board of directors.

What do we call the board members who are part of a company's senior management team appointed by shareholders to provide the board with necessary information pertaining to the company's internal workings and performance?

Sanjaya was recently hired at an up-and-coming firm that has a history of ethics violations. Which action is best for him to take if he wants to determine whether the firm is now acting ethically?

It can be difficult for shareholders of publicly traded companies to determine how much money those companies are making or losing because these companies use different accounting firms, and each accounting firm follows different rules.

Gino is the CEO of a financial services firm. What action should Gino take to be sure the firm avoids moral hazards?

How does GE exemplify the creation of a shared value creation framework?

What helps notions such as fairness, honesty, and reciprocity to be codified into law?

GameGo is a publicly traded manufacturer of home electronics. Based on what you have read, which of these actions would be wisest for GameGo's board of directors to take to be sure that the company's new CEO is as motivated as possible?

Grameen Bank in Bangladesh was founded to provide microcredit to impoverished farmers who wanted to start their own entrepreneurial ventures that would help themselves climb out of poverty. This best exemplifies Michael Porter's suggestion that

According to the agency theory,

Sirhan is president of a medium-sized bank. What can he do to lessen the chances of employees or board members taking part in insider trading?

Ignacio Inc. is a public stock company. Which of the following statements about the company best illustrates the fact that its investors have limited liability?

Angelica is the CEO of Sandhaven Ltd., a publicly traded company. The shareholders want Angelica on the board of directors despite her recent appointment as the CEO. This decision of the shareholders is most likely because Angelica is

Which of the following best supports the fact that Goldman Sachs was unethical in the Abacus deal?

Why does Michael Porter recommend expanding the customer base of an organization in terms of the shared value creation framework?

Which of the following characteristics of a public stock company deals with principals and agents?

Bernard is a board member at Lopez Electronics Inc. He is also a senior executive of the firm. The board is chaired by Ernest Jones, the CEO of Stanley Motors. According to this scenario, Bernard

Ethics is

What Is Strategy

Strategic Leadership: Managing the Strategy Process

External Analysis: Industry Structure, Competitive Forces, and Strategic Groups

Internal Analysis: Resources, Capabilities, and Core Competencies

Competitive Advantage, Firm Performance, and Business Models

Business Strategy: Differentiation, Cost Leadership, and Blue Oceans

Business Strategy: Innovation, Entrepreneurship, and Platforms

Corporate Strategy: Vertical Integration and Diversification

Corporate Strategy: Strategic Alliances, Mergers, and Acquisitions

Global Strategy: Competing Around the World

Organizational Design: Structure, Culture, and Control

Filters