Corporate Governance Final Exam
Course Introduction
Corporate Governance explores the systems, principles, and processes by which corporations are directed and controlled. The course examines the roles and responsibilities of boards of directors, executives, shareholders, and other stakeholders in ensuring ethical management and accountability. Topics include corporate structure, regulatory frameworks, transparency, risk management, and the balance between economic performance and social responsibility. Students gain insight into governance best practices, learn how good governance can prevent corporate scandals, and understand its critical role in sustaining long-term organizational success and integrity in a global business environment.
Recommended Textbook Managers and the Legal Environment Strategies for the 21st Century 7th Edition by Constance E.
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Page 2
Chapter 1: law, value creation, and risk management
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Q1) Molly,the CEO of a corporation owning a number of pet stores,calls you for advice. She tells you that she received inside information that the stock of the company was going to go down because of reports that a number of dogs sold by the store had become ill and that she,therefore,immediately sold all her stock in the company before the information became public. She tells you that she has been advised that she is going to be charged with a securities violation involving insider trading. Which of the following is true regarding her situation?
A) Corporate executives may be fined but may not be sent to jail.
B) Corporate executives may be sent to jail, but only for offenses endangering others.
C) Corporate executives may be sent to jail, but only for fraud involving banks.
D) Corporate executives may be sent to jail for violation of criminal laws.
Answer: D
Q2) Promoting economic growth is one of the primary public policy objectives of laws and regulations applicable to business.
A)True
B)False
Answer: True
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Chapter 2: Ethics ant the law
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Q1) Which of the following is part of Kant's categorical imperative?
A) The form of an action rather than the intended result determines the ethical worth.
B) No one person's interest is given more weight than another.
C) Distribution favors the person getting the worst share.
D) Both that no one person's interest is given more weight than another and that distribution favors the person getting the worst share.
Answer: A
Q2) Refer to fact pattern 2-1. Which of the following is the theory on which Richard will most likely rely?
A) The employer-freedom principle
B) The employment-at-will principle
C) The free-country theory
D) The free-market theory
Answer: B
Q3) Discuss why Enron failed and who should be held responsible for the failure.
Answer: Students should discuss improper accounting practices,questionable information provided to Wall Street investors and the public; wrongful actions by managers; and the wrongful use of partnerships.
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Chapter 3: Courts, sources of law, and dispute resolution
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Q1) Federal courts are commonly referred to as courts of limited jurisdiction.Over what three types of cases do federal district courts have jurisdiction?
Answer: Federal district courts have power to hear cases involving federal questions,cases in which diversity jurisdiction is established,and cases in which the United States is a party.
Q2) When a lawsuit is originally filed,the case name appears as appellant v appellee.
A)True
B)False
Answer: False
Q3) Which of the following are provisions issued by federal and state administrative agencies and executive departments to interpret and implement statutes enacted by a legislature?
A) Regulations
B) Interpretations
C) Reviews
D) Acknowledgements
Answer: A
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Chapter 4: Constitutional bases for business regulation
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Q1) Procedural due process protects fundamental rights.
A)True
B)False
Q2) The executive privilege fails to protect the President during his or her term of office from civil litigation over events that occurred before he or she took office.
A)True
B)False
Q3) The Second Amendment to the U.S.Constitution grants persons the right to bear arms.
A)True
B)False
Q4) The doctrine of federalism serves to allocate power between the federal government and government by the states.
A)True
B)False
Q5) Bruce is in charge of the library for a local public school and asks you if he is required to take any action to prevent students from viewing obscene material. What would you tell him?
Q6) Under what circumstances is state law preempted in favor of federal law?
Page 6
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Chapter 5: Agency
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Q1) Agents owe a fiduciary duty to the principal.Describe the specific responsibilities that are generated by this duty.Discuss fully.
Q2) An agent may bind the principal due to the agent's ________ authority.
A) express
B) implied C) apparent D) express, implied, or apparent
Q3) In agreeing to act on behalf of the principal,the agent becomes a fiduciary.
A)True
B)False
Q4) The respondeat superior doctrine typically applies to the actions of independent contractors.
A)True
B)False
Q5) The fact that leased workers are on the payroll of an employment agency does not preclude them from being considered employees of the company at which they are actually working on a joint employer theory.
A)True
B)False
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Chapter 6: Administrative Law
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Q1) ________ by administrative agencies provide a practical decision-making process for repetitive,frequent actions that are inappropriate to litigate in courts.
A) De novo decisions
B) Informal discretionary actions
C) Formal rule making
D) Informal rule making
Q2) As set forth in the text,what are the seven basic steps for working successfully with an administrative agency?
Q3) The Fifth Amendment's protection against self-incrimination does not apply to corporations.
A)True
B)False
Q4) Which of the following would a comment letter to an agency generally not contain?
A) Identification of the person concerned
B) An explanation of why the person making the comment is concerned
C) A suggestion of a specific change to the rule along with factual information to support the position asserted
D) An itemization of expected damages
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Chapter 7: Contracts
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Q1) Refer to fact pattern 7-2. Which of the following is true regarding whether Hester's attempted revocation was effective?
A) It was effective because Hester had left the offer open the amount of time required by law regardless of whether she revoked before Frank could accept.
B) It was effective because Hester issued the revocation before Frank could accept.
C) It was ineffective because the amount paid by Martha was less than the offer to Frank.
D) It was ineffective because Hester attempted the revocation at too early a point in time.
Q2) Refer to fact pattern 7-1. Did Danny have any type of contract with Prudence,and if so what type?
A) Danny did not have any type of contract with Prudence.
B) Danny had an option contract with Prudence.
C) Danny had a hold contract with Prudence.
D) Danny had a conditional contract with Prudence.
Q3) Courts enforce liquidated damages as a form of a penalty.
A)True
B)False
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Chapter 8: sales,licensing,and e-commerce
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Q1) Under the UCC,the buyer may reject any or all of the goods if the goods fail to conform to the contract.
A)True
B)False
Q2) Which of the following is true regarding the Uniform Electronic Transactions Act in relation to the E-Sign Act?
A) Because the Uniform Electronic Transactions Act is a federal law, whereas the E-Sign Act is a creature of state law, the Uniform Electronic Transactions Act preempts the E-Sign Act in many ways.
B) The Uniform Electronic Transactions Act and also the E-Sign Act exclude wills from their coverage.
C) Both the Uniform Electronic Transactions Act and the E-Sign Act include within their broad scope provisions that divorces may be entered into and recorded electronically. D) The Uniform Electronic Transactions Act allows electronic signatures whereas the E-Sign Act disallows such signatures.
Q3) What must be established in order for goods to be considered merchantable under the UCC?
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Chapter 9: Torts and Privacy protection
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Q1) What does the term respondeat superior mean?
A) Let the master answer
B) Let the servant answer
C) Let the servant or master answer
D) The master was negligent
Q2) Under the doctrine of ________,the plaintiff may recover only the proportionate amount of damages attributable to the defendant's negligence
A) contributory negligence
B) comparative negligence
C) contribution
D) indemnity
Q3) In which of the following situations would the doctrine of res ipsa loquitur apply?
A) A truck backed into a fence.
B) A jar of jam fell on your foot.
C) A post operative x-ray showed a surgical sponge in your stomach.
D) A door slammed on your foot.
Q4) Trespass may occur below the surface of land.
A)True
B)False
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Chapter 10: product liability
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Q1) Which of the following was the result in Pliva,Inc.v.Mensing,the case in the text before the U.S.Supreme Court involving the issue of whether the federal law requirement that generic drugs must bear the same FDA-approved labels as their brand-name counterparts preempts state law claims for failure to warn?
A) That federal law did not preempt state law claims for failure to warn.
B) That federal law preempted state law claims for failure to warn.
C) That federal law preempted state law claims for failure to warn based on strict liability but that failure to warn claims based on negligence could proceed.
D) That federal law preempted state law claims for failure to warn based on negligence but that failure to warn claims based on strict liability could proceed.
Q2) Which of the following allows the filing of a lawsuit previously barred by the running of the statute of limitations?
A) A statute of repose
B) A recommence statute
C) A revival statute
D) None of the above because any such law would be unconstitutional.
Q3) What are the four basic parts of the rationale for strict product liability?
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Page 12
Chapter 11: Intellectual property
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Q1) Service marks are a form of trademarks.
A)True
B)False
Q2) Trade secrets are protected for an indefinite time.
A)True
B)False
Q3) An invention will be denied patent protection if its novelty merely represents an obvious development over existing technology,also referred to as prior art.
A)True
B)False
Q4) Which of the following is an example of an arbitrary trademark?
A) Camel
B) Kodak
C) Exxon
D) Clorox
Q5) A patent holder must personally make use of the invention.
A)True
B)False
Q6) Discuss in detail common law rights,if any,in a trademark in the U.S.
Page 13
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Chapter 12: The employment agreement
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Q1) Generally,employees who earn less than _________ per week are automatically considered eligible for minimum wage and overtime as required by the Fair Labor Standards Act.
A) $240
B) $300
C) $455
D) $550
Q2) Refer to fact pattern 12-1. Which of the following would enable Ricardo to work in the U.S.?
A) A passport
B) An H-1B visa
C) A recognized visa
D) A work permit
Q3) Which of the following are generally not subject to the employment-at-will rule?
A) Public employees
B) Employees who have express employment contracts for a fixed term and public employees
C) Public employees and union employees
D) Public employees, employees who have express employment contracts for a fixed term, and union employees
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Chapter 13: civil rights and employment discrimination
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Q1) If two individuals aged 25 and 35 apply for the same position,under federal law the employer may not lawfully reject either applicant on the basis of age.
A)True
B)False
Q2) Specifically set forth what courts consider in order to determine whether there is a hostile or abusive work environment.
Q3) Plaintiffs in Title VII cases may only bring claims of harassment based on sex.
A)True
B)False
Q4) Under federal law,employees may not waive their rights under the Age Discrimination in Employment Act (ADEA).
A)True
B)False
Q5) A reasonable accommodation for a disabled employee is required whether or not it would impose an undue hardship on the employer.
A)True
B)False
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Chapter 14: Criminal law
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Q1) Which of the following is false regarding seizures and searches after a traffic stop by a police officer?
A) If a police officer makes a traffic stop that is objectively justified by probable cause to believe a traffic violation has occurred, then it is irrelevant that the police officer might have used the violation only as a pretext to stop the car.
B) Police officers need not inform detained drivers that they are "legally free to go" before asking for consent to search their vehicles.
C) A police officer may order passengers out of a vehicle during the course of a traffic stop.
D) Without driver consent, a police officer can conduct a full car search after issuing a routine traffic citation.
Q2) Fully discuss limitations on the protection against double jeopardy.
Q3) A ________ is any crime that is punishable by death or imprisonment for more than one year.
A) misdemeanor
B) felony
C) federal offense
D) white collar crime
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Chapter 15: Environmental law
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Q1) Tina is the president of Bank X which holds a mortgage on a company found liable for illegal disposal of hazardous waste. The company has stopped paying on its loan to Bank X. Tina would like to foreclose,but she does not want the bank to become liable under CERCLA as an owner. What should she do?
A) Tina should do nothing because foreclosure would automatically result in the bank becoming liable under CERCLA for clean-up costs.
B) Tina should go ahead and foreclose because so long as the bank did not participate in the management of the facility prior to foreclosure, the bank will not be considered liable under CERCLA for clean-up costs.
C) Tina should immediately arrange for the bank to become involved in managing the facility because so long as the bank participated in the management of the facility prior to foreclosure, the bank will not be considered liable under CERCLA for clean-up costs.
D) Tina might as well go ahead and foreclose because as a mortgage holder, the bank is already automatically liable under CERCLA for clean-up costs.
Q2) Who are potentially responsible parties under CERCLA?
Q3) What is the Kyoto Protocol? Is the U.S.a signatory?
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Page 17
Chapter 16: Antitrust
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Q1) If a manufacturer of television sets acquires a magazine publisher,it will be a
A) vertical merger
B) horizontal merger
C) conglomerate merger
D) product-line
Q2) Courts apply the per se rule when reviewing most tying arrangements and will,therefore,consider business justifications proffered by the tying firm.
A)True
B)False
Q3) With a(n)________ distributorship,a manufacturer limits itself to a single distributor in a given territory.
A) dual
B) exclusive
C) franchise
D) market-power
Q4) Horizontal agreements among competitors to avoid competition on nonprice matters cannot be a violation of Section 1 of the Sherman Act.
A)True
B)False
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Chapter 17: Consumer Protection
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Q1) ________ is the legal procedure by which a creditor may collect a debt by attaching a portion of a debtor's weekly wages.
A) Rescission
B) Garnishment
C) Joinder
D) Attachment
Q2) Caveat emptor means,
A) "let the buyer beware."
B) "let the buyer prevail."
C) "let the market decide."
D) "let the seller beware."
Q3) The Fair Debt Collection Practices Act applies only to third-party debt collectors.
A)True
B)False
Q4) When does an advertiser violate the Federal Trade Commission bait and switch advertising rules?
Q5) Discuss the purpose of the purpose of the Consumer Product Safety Commission and the process by which it sets mandatory safety standards.Discuss fully.
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Chapter 18: real property and land use
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Q1) In relation to notice in connection with a property interest,courts may find _______notice if a reasonable inquiry would have disclosed a prior interest.
A) actual
B) absolute
C) constructive
D) necessary
Q2) What must a person do to acquire a parcel of land by adverse possession?
Q3) Which of the following is not true regarding the legal requirements of a deed?
A) It must specifically describe the interest that is conveyed.
B) It must signed by the named grantee.
C) It must be delivered to the named grantee.
D) It must be accepted by the named grantee.
Q4) A ________ sets forth the general terms and conditions of a proposed purchase until a formal acquisition agreement can be signed.
A) letter of agreement
B) letter of intent
C) form of contract
D) formal delineation
Q5) Compare and contrast joint tenancy and tenancy by the entirety.
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Chapter 19: Forms of business organizations
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Q1) Refer to fact pattern 19-2. Which of the following is true regarding liability on the lawsuit brought by the Corgi owner?
A) The partnership is liable and Vince is liable in the event there are insufficient partnership assets to pay any judgment, but Maxine would not be liable on any judgment.
B) The partnership is liable, and so are both Vince and Maxine if insufficient partnership funds exist to pay any judgment.
C) Vince is liable on any judgment, but neither Maxine nor XYZ Grooming would be liable.
D) Since the winding-up process has begun, neither Maxine, Vince, nor XYZ Grooming would be liable on any judgment obtained.
Q2) ________ of a general partnership occurs when all the affairs are wound up and the partners' authority to act for the partnership is completely extinguished.
A) Dissolution
B) Termination
C) Winding up
D) Staged end
Q3) Explain requirements for formation of an S corporation.
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Chapter 20: Directors, Officers, and Controlling
Shareholders
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Q1) Which of the following was the result on appeal in In re Abbott Laboratories Derivative Shareholders Litigation,the case in the text alleging corporate directors' breach of the duty of good faith through their failure to follow up on repeated notices of regulatory noncompliance?
A) That the directors were not liable and did not breach any duty of good faith because they were unaware of the issues, and accepted corporate governance procedures did not require the disclosure of the noncompliance notices to them.
B) That the directors could not be held liable because the corporation's certificate of incorporation exempted directors from liability for breach of the duty of care.
C) That the business judgment rule applied and that the plaintiffs' allegations could not withstand the protection of that rule.
D) That the plaintiffs sufficiently pleaded allegations that, if true, constituted a breach of the duty of good faith leading to the directors' actions falling outside the protection of the business judgment rule.
Q2) What is greenmail? What is a standstill agreement? When,if ever,is the process of greenmail protected by the business judgment rule?
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Page 22
Chapter 21: Public and Private Offerings of Securities
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Q1) Refer to fact pattern 21-2. As far as Tony is concerned,which of the following is true?
A) Selling to Tony would not trigger registration requirements because of the professional exemption.
B) Selling to Tony would not trigger registration requirements if it can be established that his income or net worth meets amounts required to qualify him as an accredited investor.
C) Selling to Tony would not trigger registration requirements so long as he purchases under 5% of the stock.
D) Selling to Tony would trigger registration requirements.
Q2) Proxies give the proxy holder the right to vote the shares owned by the person who signs the proxy card.
A)True
B)False
Q3) Set forth the difference between firm commitment underwriting and best-efforts underwriting.
Q4) The Securities Act of 1933 is also referred to as the "blue sky" law.
A)True
B)False
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Chapter 22: Securities Fraud and insider trading
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Q1) The requirement that the defendant in a 10b-5 action have used interstate commerce,the mails,or a national securities exchange gives Congress the power to regulate the defendant's conduct under ________.
A) the due process clause of the U.S. Constitution
B) the Commerce Clause of the U.S. Constitution
C) the fifth amendment to the U.S. Constitution
D) executive order 90210
Q2) Under Section 16(b)pertaining to short-swing profits,a person will be considered a(n)________ of any securities held by his or her immediate family or any other relative living in his or her household.
A) family owner
B) beneficial owner
C) actual owner
D) imputed owner
Q3) Temporary insiders are persons not directly employed by the corporation,but who acquire confidential information through the performance of professional services.
A)True
B)False
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Chapter 23: Debtor-Creditor Relations and Bankruptcy
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Q1) Bank president Spencer had approved significant loan amounts to Bob for the purpose of developing a shopping center. Spencer was satisfied that the land collateralizing the shopping center loan was sufficient,and Spencer was not particularly concerned about that loan. Bob,however,requested an additional loan for the purpose of starting a temporary employee agency. Bob offered to collateralize that loan with his office equipment,but Spencer was uneasy that such collateral was insufficient. If Spencer decides to go forward with the loan involving the temporary employee agency,which of the following is true regarding his options?
A) Spencer should request a cross-default provision and also a cross-collateralization provision.
B) Spencer should only request a cross-default provision because Article 9 makes cross-collateralization provisions unenforceable.
C) Spencer should only request a cross-collateralization provision because Article 9 makes cross-default provisions unenforceable.
D) Spencer should request a guarantee from a solvent person or entity because Article 9 makes both cross-default and cross-collateralization provisions illegal.
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Chapter 24: International Business
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Q1) The North American Free Trade Agreement provides for elimination of barriers to trade between what countries?
A) The United States, Canada, and Mexico.
B) The United States, Canada, Mexico, and Brazil.
C) The United States and all South American countries.
D) The United States and Mexico only.
Q2) In India,Hindu law is applied to most commercial transactions.
A)True
B)False
Q3) What is the act-of-state doctrine,and how is it generally applied by U.S.courts?
Q4) The principle of equity is unique to civil law legal systems.
A)True B)False
Q5) A political union represents the agreement of countries regarding constitutional systems.
A)True
B)False
Q6) Set forth the private and public factors the U.S.Supreme Court set forth in Gilbert Oil Corp.v.Gilbert that a court should consider in deciding whether to dismiss a case based on forum non conveniens?
Page 26
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