Ch.4 Mallor Business Ethics & Governance Exam Questions

Business Law, 17e (Langvardt)

Chapter 4 Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking

1) Under the stakeholder theory of corporate social responsibility, employees' interests are considered.

2) Theories that focus only on actions or decisions alone are called deontological ethical theories.

3) Asking whether a decision will produce the right results is an example of deontological theory.

4) A teleological theory may find unacceptable that any competent employee loses his job, even if the layoff's effect is to reduce prices to consumers and increase profits.

5) Profit maximization is a deontological theory.

6) "What would happen if everyone acted in this way?" is a question that Kant would ask.

7) Rights theory concerns itself with the costs and benefits of requiring respect for another's rights.

8) Rawls's justice theory focuses on outcomes.

9) "The ends justify the means." This statement reflects the utilitarian ethical theory.

10) A retailer's decision not to close earlier than its regular closing time even though a storm warning makes it unlikely that there will be any more customers that day is an example of rule utilitarianism.

11) The reduced sales of Martha Stewart branded goods at K-Mart after she was accused of insider trading is an example of the strength of the profit maximization theory.

12) Utilitarianism is based on the laissez faire theory of capitalism.

13) The Sarbanes-Oxley Act requires public companies to have board audit committees comprising only independent directors.

14) A justice theorist would choose the alternative that allocates society's benefits and burden most fairly.

15) Profit maximization compels a decision maker to consider stakeholders other than the corporation and its shareholders.

16) "Begging the question" is also known as the slippery slope fallacy.

17) An individual can lead ethically while not attempting to behave in an ethical way.

18) Sometimes ethical conduct requires consideration of the decision maker's self-interest to produce a moral result.

19) By examining rights that are espoused by various stakeholders, decision makers are more likely to consider all the costs and benefits of their decisions and know which rights can adversely affect the firm's profitability if they fail to take them into account.

20) Critically thinking is not a skill that can be improved, someone either has it or they do not.

21) The purpose of the ________ is to increase penalties for corporate wrongdoers, establish rules designed to deter and prevent future wrongdoing, and encourage and enable corporate executives to be ethical and socially responsible.

A) Sarbanes-Oxley Act

B) Davis-Bacon Act

C) Goldwater-Nichols Act

D) Certiorari Act

22) The ________ of corporate social responsibility holds that rather than merely striving to maximize profits for its shareholders, a corporation should balance the interests of shareholders against the interests of employees, suppliers, customers, and the community.

A) deontological theory

B) Kantian theory

C) stakeholder theory

D) utilitarian theory

23) The stakeholder theory of corporate social responsibility:

A) strives to maximize profits for its shareholders.

B) tries to balance the interests of shareholders and stakeholders.

C) advocates the use of legal remedies to check corporate misbehavior.

D) advocates the freedom of corporations to run as they wish.

24) Which of the following ethical theories focuses on decisions or action alone, irrespective of the result it produces?

A) Deontological theory

B) Teleological theory

C) Profit maximization theory

D) Utilitarian theory

25) ________ ethical theories focus on the consequences of a decision.

A) Deontological

B) Teleological

C) Kantian

D) Rights

26) Which of the following ethical theories is a deontological theory?

A) Utilitarian theory

B) Teleological theory

C) Rights theory

D) Profit maximization theory

27) Which of the following ethical theories emphasizes that certain human rights are fundamental and must be respected by other humans?

A) Rights theory

B) Utilitarian theory

C) Teleological theory

D) Profit maximization theory

28) ________ theory emphasizes that one should use the categorical imperative and judge an action by applying it universally.

A) Utilitarian

B) Teleological

C) Justice

D) Kantian

29) ________ categorizes using or manipulating others as an unethical action.

A) Utilitarianism

B) Teleological ethics

C) Consequentialism

D) Kantianism

30) Which ethical theory probably justifies the protection of a neo-Nazi's right to hateful speech, even though the cost of such speech includes damage to relations between ethnic groups, which may far outweigh any benefits the society receives from the speech?

A) Rights theory

B) Teleological theory

C) Profit maximization theory

D) Utilitarian theory

31) Which of the following ethical theories has been criticized for creating a sense of entitlement reducing innovation, entrepreneurship, and production?

A) Rights theory

B) Teleological theory

C) Utilitarian theory

D) Profit maximization theory

32) ________ requires a decision maker to ensure the maximum good for the maximum number.

A) Profit maximization

B) Rights theory

C) Stakeholder theory

D) Utilitarianism

33) Which of the following ethical theories judges our actions as good or bad depending on their consequences and is expressed as "the ends justify the means"?

A) Rights theory

B) Utilitarianism

C) Kantianism

D) Deontological theory

34) ________ protects the rights of those who are less privileged in society.

A) Rights theory

B) Justice theory

C) Rule utilitarianism theory

D) Profit maximization theory

35) Which of the following ethical theories requires decision makers to maximize utility for society as a whole?

A) Profit maximization theory

B) Deontological theory

C) Rights theory

D) Utilitarian theory

36) Kurt is trying to decide whether or not he should drive to work every day and has a number of questions. Will it save valuable time? Will he be adding to environmental pollution? Will it add to the problems of heavy traffic on the roads? Would carpooling be a better idea? Which of the following ethical theories does Kurt adhere to?

A) Utilitarian ethics

B) Deontological ethics

C) Kant's categorical imperative

D) Rights theory

37) ________ is a teleological ethical theory because it focuses on results by maximizing total social welfare.

A) Rights theory

B) Kantian theory

C) Deontological theory

D) Profit maximization theory

38) Which of the following ethical theories illustrates that acting in one's selfish interests can ultimately result in ethical behavior and benefits to society?

A) Rights theory

B) Profit maximization theory

C) Kantian theory

D) Justice theory

39) Which of the following is a characteristic of profit maximization?

A) It is concerned with the equal distribution of wealth in society.

B) It protects everyone's fundamental rights.

C) It is closely related to utilitarianism because it focuses on results.

D) It ensures complete responsible and ethical behavior by corporations.

40) Profit maximization results in ethical conduct because:

A) it emphasizes the right to redistribute wealth in order to help the poor and disadvantaged.

B) it requires society's members to act within the constraints of the law.

C) it protects fundamental rights, unless some greater right takes precedence.

D) it focuses on the decision or action itself, irrespective of what results it produces.

41) The ________ requires a public company to disclose whether it has adopted a code of ethics for senior financial officers, and to disclose any change in the code or waiver of the code's application.

A) Davis-Bacon Act

B) Goldwater-Nichols Act

C) Sarbanes-Oxley Act

D) Certiorari Act

42) Which of the following factors can impose direct penalties for corporate misbehavior?

A) Market forces

B) Corporate management

C) Labor unions

D) Investors

43) Which of the following is a prescribed guideline for ethical decision making?

A) What gives me maximum profit?

B) Will stakeholders offer support?

C) How can I increase the number of shareholders?

D) How do the alternatives impact my business firm?

44) Speedster is an automobile manufacturing company that has a factory in Seattle, Washington. It has placed Keith McShane, the operations head of the factory, in charge of investigating the firm's decision whether to move the factory to Qingdao, China. Keith is against the idea of the factory relocating to Qingdao because his fellow Americans will lose their jobs to the Chinese. Therefore, he is desperately searching for information that favors Seattle over Qingdao. Which of the following prescribed guidelines for ethical decision making will Keith need to focus on to make an unbiased, ethical decision?

A) Will the shareholders offer support?

B) What facts impact my decision?

C) How can I increase the number of shareholders?

D) Which decision will allow me to retain my job?

45) "Your decision will be better for your firm and other stakeholders if you consider your selfish interest." Considering that this statement is true, which of the following prescribed guidelines for ethical decision making should you focus on?

A) Will the shareholders offer support?

B) How can I increase the number of shareholders?

C) How do the alternatives impact me, the decision maker?

D) Who are the stakeholders?

46) Bennett is in the process of making an important decision for his firm. Which of the following actions strengthens the argument that Bennett is a utilitarian?

A) Bennett chooses the alternative that promises the highest net welfare to society as a whole.

B) Bennett implements the alternative that allocates society's benefits and burden most fairly.

C) Bennett considers whether everyone is getting what they deserve.

D) Bennett determines whether anyone's rights are negatively affected by an alternative.

47) Trisha has been given the responsibility of making an important decision for her firm. Which of the following actions strengthens the argument that Trisha is a justice theorist?

A) Trisha chooses the alternative that promises the highest net welfare to society as a whole.

B) Trisha chooses the alternative that respects the most important human right.

C) Trisha considers whether everyone is getting what they deserve.

D) Trisha determines whether anyone's rights are negatively affected by an alternative.

48) Carol, an Acme Co. employee, regularly takes pens, paper, and other office supplies from the Acme office supply cabinet and brings them home for her husband to use in his home office. Carol defends this action by saying that: "I don't get paid enough, and besides, no one will miss the supplies." This statement is an example of:

A) circular reasoning.

B) false analogy.

C) bandwagon fallacy.

D) a non sequitur.

49) A "non sequitur" used in an argument is a wrong conclusion:

A) that does not follow from the facts or premises set out.

B) based on a false analogy.

C) that relies on the idea that a popular belief is true.

D) based on an attack against the speaker, not his/her reasoning.

50) An "argumentum ad populum" used in an argument is a wrong conclusion:

A) that does not follow from the facts or premises set out.

B) based on a false analogy.

C) that relies on the idea that a popular belief is true.

D) based on an attack against the speaker, not his/her reasoning.

51) Debra asks Alex, her stock broker, if she can trust his advice to purchase the stocks for Acme Co. Alex replies, "Of course you can." Debra asks, "Why should I trust you?" Alex says, with a smile, "Because I am a trustworthy person." Alex is engaging in:

A) circular reasoning.

B) bandwagon fallacy.

C) argumentum ad baculum.

D) false analogy.

52) Bill, a senior manager at Bizlaw Inc., instructs Kim, a mid-level manager, to make false statements on the performance evaluation of Gloria, one of Kim's employees, who recently filed a discrimination claim against Bill. Bill tells Kim, "Look around you. Every manager makes up stories about employees Bizlaw wants to get rid of." Bill's argument illustrates:

A) bandwagon fallacy.

B) argumentum ad baculum.

C) argumentum ad hominem.

D) circular reasoning.

53) A ________ argument states that we should or should not do something merely because one or more other people or firms do or do not do it.

A) bandwagon fallacy

B) circular reasoning

C) false cause

D) gambler's fallacy

54) Which of the following attacks the speaker for his argument, not his reasoning?

A) Argumentum ad hominem

B) Argumentum from authority

C) Argumentum as populism

D) Argumentum ad vacuum

55) Guilt by association is a form of:

A) begging the question.

B) argumentum ad hominem.

C) argumentum ad populum.

D) gambler's fallacy.

56) Jack flipped a coin five times and each time it came up heads. His friend Atmel saw this and bet Jack that the next flip would come up tails. Atmel figured that it was overdue for a tails and so tails was a more likely outcome in the next flip. Atmel has fallen prey to:

A) sunk cost fallacy.

B) reductio ad absurdum.

C) argumentum ad hominem.

D) gambler's fallacy.

57) Which of the following is also called the slippery slope fallacy?

A) Gambler's fallacy

B) Reductio ad absurdum

C) Sunk cost fallacy

D) Argumentum ad hominem

58) Bob DeSlob, CEO of Westlake Inc., had supported the development and distribution of the Super Widget, a product that is expensive to make. The Super Widget failed to meet its expected sales. decides to invest more resources to produce and aggressively market the Super Widget, rationalizing that if he did not invest more in the product, what he has invested would be lost. Bob is engaging in:

A) sunk cost fallacy.

B) argumentum ad baculum.

C) argumentum ad hominem.

D) reductio ad absurdum.

59) The last tactic to adopt in resisting a request to act unethically is to:

A) buy time to think about a solution.

B) find a mentor and peer group.

C) prepare to lose the job.

D) find win-win solutions.

60) Which of the following critical thinking errors is likely to occur among the subordinates if a leader is unethical?

A) False analogy

B) Bandwagon fallacy

C) False cause

D) Gambler's fallacy

61) If alternatives are not explored when making an ethical decision, there is a risk that:

A) the decision maker will stop the project with no plans to resume.

B) the decision maker will move forward with the decision.

C) the best course of action was not chosen because it was not considered.

D) the best course of action was not chosen because the decision maker already knew what he wanted to do.

62) Knowing ________ will help a decision maker find the facts he needs.

A) practical constraints

B) alternatives

C) whom the decision affects

D) his own goals

63) When making an ethical decision, one must look at how alternatives impact society as a whole. Which of the following theories does this guideline closely follow?

A) Kantian theory

B) utilitarian theory

C) deontological theory

D) stakeholder theory

64) Coca-Cola's failed attempt to launch a new formula in 1985 is an example of:

A) how a company can timely implement a prepared backup plan.

B) why a company must prepare for the worst-case scenario.

C) why a company should perform market research.

D) why a company should never remove its original product.

65) Sharon eats dinner at Chain Restaurant and orders its daily special, the lobster bisque soup. Sharon becomes ill and believes she has food poisoning. She argues because Chain Restaurant has lots of money, it should pay for her medical expenses. This is an example of:

A) bandwagon fallacy.

B) false analogy.

C) circular reasoning.

D) a non sequitur.

66) The ________ fallacy generates support for a proposition by focusing on a victim's predicament.

A) appeals to pity

B) sunk cost

C) slippery slope

D) bandwagon

67) In the federal trial against a 9/11 co-conspirator, a federal prosecutor wanted to introduce testimony of the families of the victims. The use of this testimony is an example of:

A) gambler's fallacy.

B) reductio ad absurdum.

C) argumentum ad hominem.

D) appeals to pity.

68) A ________ is when a person compares two situations that are not sufficiently similar to be a valid comparison.

A) bandwagon fallacy.

B) argumentum ad hominem.

C) appeals to pity

D) false analogy

69) ________ can identify potential opportunities and suggest potential problems.

A) Bias

B) Parables

C) Fallacies

D) Analogies

70) An arguer ________ when she takes for granted or assumes the thing that she is setting out to prove.

A) creates a false dilemma

B) appeals to authority

C) begs the question

D) appeals to pity

71) "Studies show that humans need to drink 10 glasses of water a day" is an example of a(n):

A) argument from authority.

B) appeal to popularity.

C) red herring fallacy

D) false dichotomy.

72) Which of the following fallacies results from observing two events and concluding that there is a causal link between them when there is no such link?

A) False cause

B) False dichotomy

C) False dilemma

D) Appeal to ignorance

73) Which of the following fallacies results from the mistaken belief that independent prior outcomes affect future outcomes?

A) Sunk cost

B) False cause

C) argumentum ad hominem

D) Gambler's fallacy

74) ________ infer(s) that because something has been done a certain way in the past, it should be done the same way in the future.

A) Gambler's fallacy

B) Appeals to authority

C) Appeals to tradition

D) Sunk cost

75) "I don't know why we do it, but we've always done it that way, and it's always worked, so we'll continue to do it that way." This statement is an example of the:

A) appeals to authority fallacy.

B) gambler's fallacy.

C) sunk cost fallacy.

D) appeals to tradition fallacy.

76) Recently, retailers were criticized for opening their retail stores on Thanksgiving Day. Those against the openings felt that workers should spend the day with their families. However, the same critics continued to consume sports programming and utilities provided by those working on Thanksgiving Day. Which of the following fallacies is not in this example?

A) Appeals to pity

B) The lure of the new

C) Appeals to tradition

D) Non sequitur

77) Doing or buying something merely because it is "just released" or "improved" is an example of:

A) appeals to pity.

B) a sunk cost.

C) appeals to tradition.

D) lure of the new.

78) Which of the following is not a common characteristic of poor decision making?

A) Failing to remember goals

B) Lack of support from supervisors

C) Overconfidence

D) Complexity of the issues

79) ________ is an example of overconfidence where a person believes "we must be doing things the right way because all has gone well in the past."

A) Neglect of probability

B) Confirmation bias

C) Illusory correlation

D) Egocentric bias

80) ________ leads a person to be more confident than he should be about the extent of his knowledge and problem-solving skills.

A) Overconfidence bias

B) Confirmation bias

C) Appeals to ignorance

D) False dilemma

81) Which of the following is not contemplated when a person "buys time" after being asked to do something he thinks might be unethical?

A) Seek advice and assistance from other people

B) Find more facts

C) Prepare to lose the job

D) Evaluate the ethics of the action

82) A(n) ________ can be a sounding board for decisions, provide information on those who can help, offer advisement of proper procedures, and provide backup when opposing a boss's decision.

A) liaison

B) mentor

C) peer

D) entrepreneur

83) Because some employees will view whistleblowing as an act of disloyalty, management should recharacterize whistleblowing as necessary to the protection of the firm's:

A) integrity.

B) ethics code.

C) reputation and goodwill.

D) decision-making processes and reputation.

84) Employees who feel a sense of ________ in the organization are more likely to be employees with both a greater sense of satisfaction and higher commitment to the overall mission of the firm.

A) loyalty

B) entitlement

C) power

D) ownership

85) The text specifically discusses that failure to reprimand staff for unethical actions may:

A) reduce productivity.

B) create a toxic environment.

C) send the message that the firm condones the illegal or unethical acts.

D) decrease employee morale.

86) Explain the difference between shareholder theory and utilitarianism.

87) What three things are seen in the corporate scandals of 2002, such as Enron and WorldCom?

88) How can a corporation improve its corporate governance and corporate responsibility?

89) Carol, a senior manager at Bizlaw Inc., encourages Rob, her junior manager, to bill Bizlaw's clients for his commute time, and identify it as "meet and confer with senior manager." Carol explains that she will then adjust her own billing sheet to match this entry. Carol tells Rob that all other Bizlaw junior and senior managers engage in this practice and that clients have never questioned such entries. Rob is not sure whether this would be an ethical action. What should Rob do?

90) What is confirmation bias and how can it be detrimental? How can it be avoided?