Corporate Governance Exam Solutions
Course Introduction
Corporate Governance examines the systems, principles, and processes by which corporations are directed and controlled. The course explores the roles and responsibilities of key stakeholders including shareholders, boards of directors, management, and regulators and addresses issues such as accountability, transparency, and ethical decision-making. Through the analysis of frameworks, legal and regulatory environments, and contemporary case studies, students gain insight into the impact of governance on corporate strategy, risk management, and organizational performance. The course emphasizes the significance of effective governance in promoting sustainable business practices and maintaining investor and public trust.
Recommended Textbook
Strategic Corporate Social Responsibility Sustainable Value Creation 4th Edition by David Chandler
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Chapter 1: What Is CSR?
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Sample Questions
Q1) In contrast to Milton Friedman's argument,David Packard argued that
A)businesses exist not only to make money but also to contribute to society.
B)the sole purpose of businesses is to make money.
C)businesses need not consider all stakeholders.
D)shareholders are responsible for the larger community within which a firm operates.
Answer: A
Q2) Financial scandals around the turn of this century at Enron,WorldCom,Adelphia,HealthSouth,and others led to which of the following?
A)Greater reliance on nonstandard accounting practices
B)Less reliance on nonstandard accounting practices
C)New laws and governmental rulings that limit business's discretionary actions
D)Revocation of laws and rulings that limit business's discretionary actions
Answer: C
Q3) Since the early 19th century,managers have consistently paid attention to the interests of all stakeholders.
A)True
B)False
Answer: False
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Chapter 2: The Driving Forces of CSR
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Q1) How does strategic CSR seek evolution of the current economic model?
A)It seeks to reform the current system so that value is created broadly by integrating a CSR perspective into firm strategy and throughout operations.
B)It seeks to create a new economic system that does not have the flaws of the current model.
C)It seeks a piecemeal fix of the current economic model by addressing small issues over a longer period of time.
D)It seeks to develop the current system through government regulation of firm practices.
Answer: A
Q2) Why are brands more important today than they were in the past?
Answer: Answers will vary but should highlight issues of globalization and communication technologies.
Q3) Corporate social responsibility only influences some aspects of a company's operations.
A)True
B)False
Answer: False
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Chapter 3: Corporate Rights and Responsibilities
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Q1) Which of the following is NOT an objective outcome of corporate social responsibility?
A)A large retail chain pays its employees a living wage.
B)A small business implements a recycling program.
C)A firm focuses on the fluid process by which value is created for multiple stakeholders.
D)A manufacturing company requires its suppliers to use fair labor practices.
Answer: C
Q2) In terms of oversight,liability,responsibility,and regulation,________ is considered the friendliest place to do business in the United States.
A)California
B)Delaware
C)Florida
D)Texas
Answer: B
Q3) Value creation is the same for every business and every stakeholder.
A)True
B)False
Answer: False
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Chapter 4: Stakeholder Theory
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Q1) Putting yourself in the role of a CEO,describe the five steps of stakeholder prioritization,giving examples from your fictitious firm.
Q2) What is the first step in stakeholder prioritization?
A)Act as quickly as is prudent to satisfy as many stakeholders as possible.
B)Analyze the nature of the issue.
C)Identify and engage the set of stakeholders that are relevant to the firm.
D)Prioritize among competing stakeholder interests and demands.
Q3) Increasingly,managers will be required to address the competing interests of
A)a narrow group of stakeholders.
B)a wide range of stakeholders.
C)a shrinking group of stakeholders.
D)governmental stakeholders and regulators.
Q4) When prioritizing stakeholders,firms may consider which of the following factors?
A)Employee happiness
B)Community desires
C)Supplier demands
D)All of the above
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Chapter 5: Corporate Stakeholder Responsibility
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Q1) What did Charles Handy argue in his 2002 Harvard Business Review article?
A)A corporation should not waste time on CSR initiatives.
B)If businesses are not making large profits,they should not exist.
C)Firms should make satisfying shareholders their first priority.
D)A business has to have a motivation other than merely making a profit in order to justify its existence.
Q2) Current growth in activist organizations can be attributed to the adoption of the six Principles of Responsible Management Education (PRME)by many business schools.Select three of the six principles and,in your own words,describe how the selected principles can lead to greater social responsibility by corporations and stakeholders.
Q3) An unchecked,unbridled pursuit of economic value,without regard to the social consequences (e.g.,such as by manufacturing a product in a way that generates excessive pollution),creates
A)the strategic CSR window of opportunity.
B)a CSR deficit for the society in which the firm operates.
C)the CSR perspective.
D)the Iron Law of Social Responsibility.
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Chapter 6: Who Owns the Corporation?
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Q1) A share is a legal contract between the investor and the firm.
A)True
B)False
Q2) Since their inception in the United States,corporations have all been limited liability.
A)True
B)False
Q3) Which of the following is an example of a program that would be a good fit for social impact bonds (SIBs)?
A)Promoting high school graduation
B)Supporting healthful lifestyle choices
C)Reducing prisoner recidivism
D)All of the above are examples.
Q4) To encourage long-term thinking across all aspects of operations,firms like Unilever
A)began issuing quarterly earnings guidance.
B)stopped issuing quarterly earnings guidance.
C)began issuing monthly earnings reports.
D)stopped issuing annual earnings reports.
Q5) Would you invest in social impact bonds (SIBs)? Why or why not?
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Chapter 7: The Pursuit of Profit
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Q1) By 2016,it is estimated that the richest 1% of the world's population will own more wealth than approximately ________ of the population.
A)25%
B)50%
C)75%
D)99%
Q2) The existence of profit is a prima facie indication that the business has succeeded in producing something consumers want and value.
A)True
B)False
Q3) According to the textbook,stakeholders do not have it in their collective power to shape which firms they want to populate the economy.
A)True
B)False
Q4) Prahalad argued that poor people in the developing world needed more educational and health services provided by Western democracies.
A)True
B)False
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Chapter 8: Incentives and Compliance
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Q1) What is the best way for businesses to achieve socially responsible behavior?
Q2) Is behavioral economics more or less applicable in public policy than in private,for-profit business settings?
Q3) Walmart has been criticized for all but which of the following?
A)Paying wages that are too low
B)Squeezing margins of suppliers
C)The negative impact on rural downtowns
D)Reducing its retail prices
Q4) Understanding what Walmart does and why it does it is integral to understanding the role of corporate social responsibility in business today because
A)Walmart is an essential part of the global economy.
B)Walmart has a long history of very negative CSR practices.
C)Walmart has a long history of very positive CSR practices.
D)Walmart is a leader in sustainability efforts.
Q5) As a leader in environmental sustainability initiatives,Walmart is
A)sacrificing profits to satisfy other stakeholder concerns.
B)prioritizing environmental causes over shareholder concerns.
C)giving in to powerful environmental lobbies.
D)becoming more efficient in order to pass lower costs on to customers.
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Chapter 9: Accountability
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Q1) What reforms would you recommend to a mortgage lender in terms of employee incentives to ensure it avoids Countrywide's mistakes? In general,how do you motivate salespeople who work on commission (as many mortgage brokers did in the run-up to the 2008 financial crisis)to sell products that are in their customers',rather than their own,interests?
Q2) ________ is the term for the societal costs associated with air pollution from diesel trucks that transport products from factories to stores.
A)Externalities
B)Internalities
C)Sustainability costs
D)Lifecycle costs
Q3) In your view,what were the main causes of the financial crisis that started in 2008? What are the main solutions? What form of global economic system should we be striving to create?
Q4) The intellectual driving force behind the Occupy Wall Street movement challenged
A)the taxpayer bailout of big banks.
B)the concept of "too big to fail."
C)the legitimacy of the efficient market.
D)creative capitalism.
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Chapter 10: Strategy + CSR
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Q1) SWOT analyses allow firms to identify their
A)Strategies,Wealth,Opportunities,and Theories.
B)Strategies,Weaknesses,Organization,and Threats.
C)Strengths,Wealth,Opportunities,and Theories.
D)Strengths,Weaknesses,Opportunities,and Threats.
Q2) As the news media and blogosphere continue to expose corporate social responsibility transgressions and people are better able to compare conditions across cultures,what will happen with societal tolerance for irresponsible behavior?
A)It will increase.
B)It will not change.
C)It will decrease.
D)It will be accounted for primarily in financial terms rather than cultural terms.
Q3) Firms that sell based on price are likely
A)to pay greater attention to corporate social responsibility.
B)to have the resources to mount an effective corporate social responsibility campaign.
C)to attract less attention from consumers on issues unrelated to price.
D)to be big and thus attract greater attention from interest groups.
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Chapter 11: CSR as a Strategic Filter
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Q1) Core competencies are the firm's assets that are unique and difficult to replicate.
A)True
B)False
Q2) A large majority of consumers are willing to pay higher prices for "green" products.
A)True
B)False
Q3) Thoroughtly define greenwash and explain why it is dangerous to the overall corporate social responsibility effort.
Q4) In the 1990s,Nike's brand was damaged when it was discovered that some of its products were manufactured in sweatshop factories.Since the 1990s,Nike has repaired its brand reputation.According to the textbook,Nike's business strategy before the 1990s did not employ
A)ethical managers.
B)a CSR filter.
C)the appropriate public relations firm.
D)a strategic planning director.
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Chapter 12: Strategic CSR
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Q1) Which of the following is NOT one of the components of the working definition of strategic CSR?
A)Understanding and responding to needs of stakeholders
B)Responsibly addressing environmental sustainability
C)Incorporating a CSR perspective within the firm's culture and strategic planning processes
D)Any actions taken are directly related to core operations.
Q2) Starbuck's Coffee and Farmer Equity (C.A.F.E.)Practices do NOT include guidelines for coffee farmers in which area?
A)Product quality
B)Educational requirements for suppliers
C)Social responsibility
D)Environmental leadership
Q3) Which of the following is NOT an example of strategic CSR?
A)Dell plants a tree for each computer it sells.
B)Nike addresses the issue of a livable wage in countries where its products are manufactured.
C)Budweiser provides education about alcohol abuse to high school students.
D)Unilever provides affordable cleaning products in developing countries.
Q4) Should Starbucks form partnerships with farmers in Guatemala? Why or why not?
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Chapter 13: Sustainability
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Q1) Which country has the lowest levels of carbon emissions per capita?
A)China
B)Germany
C)India
D)United States
Q2) Global warming is a prediction.
A)True
B)False
Q3) From a company's perspective,________ is made up of clean air,reliable availability of freshwater,and productive topsoil.
A)natural capital
B)environmental accounting
C)environmental profit and loss
D)renewable capital
Q4) Must the global economic model of mass consumption change if there is to be realistic progress toward improving the environment?
Q5) Describe each of the reasons that firms should care about sustainability.Which is the most important to you,and why is it most important?
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Chapter 14: Implementing CSR
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Q1) Which oil company led the way in corporate social responsibility auditing and reports in 1995 following two separate NGO-orchestrated campaigns?
A)BP
B)Chevron
C)Exxon
D)Shell
Q2) Over the medium to long term,firms implementing strategic corporate social responsibility should have executive buy-in and establish a CSR vision.
A)True
B)False
Q3) According to the textbook,________ and ________ have become the watchwords of good corporate governance.
A)sustainability; stakeholder value
B)accountability; sustainability
C)sustainability; transparency
D)transparency; accountability
Q4) How can corporate social responsibility be genuinely integrated into strategic planning?
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Chapter 15: Sustainable Value Creation
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Q1) Which of the following is NOT a reason the John Lewis Partnership program is successful?
A)The program is built around the value of fairness.
B)A significant percentage of the profits is distributed to the employees.
C)Staff turnover is comparable to that in similar industries.
D)The staff are more productive and the company is more successful during economic downturns.
Q2) A strategic CSR perspective argues that employees shoud be treated as ________ rather than as ________.
A)family members; work acquaintances
B)costs; assets
C)assets; costs
D)partners; coworkers
Q3) A ________ is a for-profit firm that is founded on a vision and mission defined by a strategic CSR perspective.
A)social enterprise
B)stakeholder-based business
C)sharia-compliant business
D)values-based business
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