Corporate Governance And Business Ethics

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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
Corporate Governance and Business Ethics

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Question 1

Free

True/False

If a privately held company has a history of legal and ethical problems, those problems can prevent a successful initial public offering (IPO) from taking place.

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False

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Question 2

Free

True/False

A detergent manufacturer decides to clean up the waterways it uses even though no federal, state, or local laws require the firm to do this. The firm's managers believe that the cleanup will improve the company's image and benefit the environment. This scenario is an example of shareholder capitalism.

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True

False

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Question 3

Free

True/False

Dinesh is a senior manager at a large, publicly traded corporation. He has access to insider information about the company profits, losses, mergers, and acquisitions. It is legally and ethically acceptable for him to have this information as long as he does not use it to buy or sell stocks and does not tell others to buy or sell stocks.

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Question 4

Free

True/False

Jeannette was a manager at Fabco. Instead of working full-time on Fabco's projects, she used Fabco's tools, employees, computers, and other resources to work on a research project that she hopes might help her start her own firm. This is an example of adverse selection.

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Question 5

Free

True/False

One of the most challenging aspects of principal-agent problems is that firms have almost no defenses against them.

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False

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Question 6

True/False

Linda owns and runs her own firm. She also serves on the boards of several companies. Although she does not work for these companies, she attends board meetings, analyzes information, and tries to act in the best interests of their shareholders. Linda is an example of an outside director.

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True

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Question 7

True/False

It is up to shareholders to make certain that the financial statements that their firms release are correct and not misleading.

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Question 8

True/False

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.

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True

False

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Question 9

True/False

Corporate codes of conduct go beyond what the law requires, imposing higher standards of honesty and fairness.

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True

False

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Question 10

True/False

Research indicates that most corporate ethics problems are caused by a few "bad apples" rather than an unethical culture.

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True

False

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Question 11

Multiple Choice

How did Uber conflict with Carnegie Mellon University's National Robotics Engineering Center (NREC)?

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Uber promised a large donation to NREC but then reneged on the offer when NREC would not provide Uber with researchers.

Uber poached entire NREC research teams with signing bonuses, twice the salaries, and stock options, thereby threatening the future of NREC.

Uber allegedly stole ideas from the NREC research team and then claimed that these ideas were generated by their own researchers.

Uber bribed NREC officials to give permission for building an extension to the NREC facility that focuses solely on Uber research.

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Question 12

Multiple Choice

Angie owns and runs Archana, a private start-up company with a current value of $1.3 billion. Archana is interested in going public to fund future growth. Which action should Angie take before Archana's initial public offering?

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Angie should come up with a business plan for what Archana will do once it is no longer publicly traded.

She and senior managers should write down their code of ethics.

Angie should not embark on an IPO until Archana's value is higher.

She should investigate Archana's existing or potential problems with ethics or the law, if such problems exist.

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Question 13

Multiple Choice

Which of the following statements is true of shareholders in a public stock company?

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They directly supervise and coordinate the manufacture of products and delivery of services.

They are granted a charter of incorporation by the state and legally own company stock.

They are the centerpiece of corporate governance.

They are appointed by a board of directors to oversee the company's management.

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Question 14

Multiple Choice

Which of the following descriptions best exemplifies adverse selection?

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A manager cannot ascertain the contributions of individual team members in team production.

A research scientist uses the organization's resources to conduct personal research.

An employee spends time on social networking sites during work hours.

An interview candidate lists his qualifications in chronological order.

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Question 15

Multiple Choice

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?

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Employees of Ignacio are legally permitted to invest their capital in the company's stock.

Employees of Ignacio are also the owners of the company.

Shareholders of Ignacio are responsible to the company only to the capital they have invested.

Shareholders of Ignacio are not permitted to trade their company stock at the New York Stock Exchange (NYSE).

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Question 16

Multiple Choice

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?

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separation of legal ownership and management control

legal personality

limited liability for investors

transferability of investor ownership

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Question 17

Multiple Choice

Eyenima Inc. is a public stock company. Which of the following best exemplifies the legal personality of the company?

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Frieda, a shareholder, can legally sell shares of Eyenima in the stock market.

Tabitha is a shareholder of Eyenima but does not have any managerial duties.

Edward, an employee at Eyenima, is not responsible for any losses that Eyenima incurs.

Bjorn Eyenima, the company's founder, died a few years ago, yet the company is doing well.

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Question 18

Multiple Choice

Jaronda founded Diamond Communications Inc. in 1993. Ten years later, the company went public. Despite Jaronda's death in 2005, the company reported a 75 percent increase in revenue in 2006. Which of the following characteristics of a publicly traded company does this scenario best exemplify?

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transferability of investor ownership

legal personality

limited liability for investors

separation of legal ownership and management control

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Question 19

Multiple Choice

Starling Inc. is a public stock company that provides natural gas for businesses. Although this company generates a large profit, management's focus on reducing costs caused the maintenance budget to be trimmed. Its pipelines have at times leaked, which created significant environmental problems. As a result, the company's value creation has suffered. This scenario supports Michael Porter's warning that public companies

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often do not keep economic needs and societal needs separate from each other, thereby contributing to low value creation.

have defined value creation too narrowly in terms of financial performance, thereby contributing to black swan events.

do not focus enough on increasing firm profits, thereby contributing to low value creation.

have defined value creation too narrowly and as a result have ignored political lobbying, thereby contributing to black swan events.

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Question 20

Multiple Choice

According to Michael Porter, which of the following is a problem with many publicly traded companies?

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Shareholders of publicly traded companies do not have a legitimate claim on profits.

They have defined value creation too narrowly in terms of financial performance.

There is no transferability of stock ownership in publicly traded companies.

Publicly traded companies have no legal standing and are not responsible for their debts.

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