Corporate Governance Test Questions
Course Introduction
Corporate Governance explores the systems, principles, and processes by which companies are directed and controlled. The course examines the roles and responsibilities of boards of directors, management, shareholders, and other stakeholders in fostering ethical decision-making, accountability, and transparency within organizations. Students will analyze global governance frameworks, regulatory requirements, best practices, and the impact of governance structures on corporate strategy and performance. Emphasis is placed on understanding the balance between stakeholder interests, managing risks, and the importance of ethical leadership in driving sustainable corporate success.
Recommended Textbook Business and Society Ethics Sustainability and Stakeholder Management 10th Edition by Carroll
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Chapter 1: The Business and Society Relationship
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Q1) What is the difference between internal and external stakeholders?
Answer: The primary difference between internal and external stakeholders is their relationship to the firm. Internal stakeholders are considered to be "insiders"--that is, they have a direct impact on the decisions and operations of the firm. Owners and employees are the most widely recognized internal stakeholders. External stakeholders are those parties "outside" the firm--those who may be able to influence the decisions and actions taken inside the organization, but cannot directly implement them. The government, consumers, and community members are primary external stakeholders. For those familiar with the concept of line and staff functions within an organization, internal stakeholders can be thought of as analogous to the line, and external stakeholders as similar to staff functions.
Q2) Sustainability, at a simple level, is about business's:
A) ability to survive and thrive over the long term
B) approach to only the natural environment
C) preservation of the environment in the present generation
D) ability to meet the needs of the present while compromising future generations
Answer: A
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Chapter 2: Corporate Social Responsibility, Citizenship, and Sustainability
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Q1) Which of the following is not a characteristic of a socially responsible company?
A) makes products that are safe
B) makes above average financial returns
C) does not pollute air or water
D) recycles within the company
Answer: B
Q2) One of the arguments that opponents of corporate social responsibility use is that business already has enough power, so society should not grant it more power by relying on it to alleviate social problems. Evaluate this argument.
Answer: In many ways, the arguments for corporate social responsibility can be summarized by the old saying, "to whom much is given, much is expected." Business already has a high degree of power in our society, and so, according to this saying, it should be expected to help solve social problems. Because business already has this power, it does not seem that society would be losing anything by requiring business to use it to solve social problems, rather than focus solely on gaining further financial rewards for itself.
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Chapter 3: The Stakeholder Approach to Business, Society, and Ethics
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Q1) Describe the levels of stakeholder management capability.
Answer: Level 1, the rational level, is the preliminary step of stakeholder management. Here, the firm simply identifies who its stakeholders are and what stakes they hold. Little stakeholder management occurs at this level--the work is just becoming familiar with who the potential stakeholders are. Level 2, the process level, represents the next step in stakeholder management, integrating the firm's knowledge about its stakeholders into its planning process. It is important to note, however, that the firm still makes no attempt to engage the stakeholders--it is simply gathering more information about them and considering them in the firm's planning process. Level 3, the transactional level, is where the firm actually makes contact with stakeholders and develops relationships with them. It is only at this level that the firm attempts to respond to stakeholder's needs.
Q2) The use of generic groups to answer the question "Who are our stakeholders?" is generally sufficient for businesses.
A)True
B)False
Answer: False
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Chapter 4: Corporate Governance: Foundational Issues
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Q1) Why is insider trading illegal and considered unethical? Isn't that exactly what financial markets are supposed to do--reward those who make good decisions?
Q2) During the past forty years, corporate boards have become more diverse.
A)True
B)False
Q3) The purpose of corporate governance is a direct outgrowth of the question of legitimacy.
A)True
B)False
Q4) The corporate system as a whole rarely addresses the idea of social legitimacy.
A)True
B)False
Q5) Business, by virtue of its place in society, has an inherent right to exist.
A)True
B)False
Q6) Summarize the responsibilities that corporations should have toward their shareholders.
Q7) What are the two main issues associated with CEO pay?
Q8) What is the difference between an owner and an investor?
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Chapter 5: Strategic Management and Corporate Public Affairs
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Q1) The public affairs function is a logical component of the overall strategic management process.
A)True
B)False
Q2) Sustainability reports can be thought of as a planning and control system.
A)True
B)False
Q3) The concept of enterprise-level strategy is the idea that best links
A) ethics to performance.
B) strategy to performance.
C) public policy to performance.
D) ethics to strategy.
Q4) Public affairs evolved from social activism.
A)True
B)False
Q5) Enterprise-level strategy and societal-level strategy are synonymous.
A)True
B)False
Q6) Name the categories of concerns considered by strategic management. Why should these concerns be part of corporate strategy? Page 7
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Chapter 6: Risk, Issue, and Crisis Management
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Q1) The most effective form of communication during a crisis is one that is reactive.
A)True
B)False
Q2) Which is not a leading force of social change?
A) Leading technology
B) Leading authorities
C) Leading organizations
D) Leading advocates
Q3) The case that is generally agreed to have "made" crisis management is the
A) Ford/Firestone tire tread separation case.
B) Johnson & Johnson/Tylenol case.
C) Enron scandal.
D) Exxon Valdez oil spill.
Q4) Which of the following is not a stage in the issues development process?
A) felt need
B) resolution
C) media coverage
D) regulation
Q5) Describe what "stakeholder integration techniques" are.
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Chapter 7: Business Ethics Essentials
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Q1) What are the differences among "immoral," "moral," and "amoral?"
Q2) The best reason to base one's ethics on societal norms is that the norms do not conflict; thus they provide clear guidance to "right" and "wrong."
A)True
B)False
Q3) Immoral management implies that decision makers know right from wrong, but choose to do wrong.
A)True
B)False
Q4) The most serious danger of using the conventional approach to business ethics is A) reliance on normative ethics without regard to descriptive ethics.
B) lapsing into ethical relativism.
C) lack of innovation in ethical judgments.
D) stunting one's moral development.
Q5) The key operating question of amoral management is
A) can we make money with this action, regardless of what it takes?
B) will this action be fair to all stakeholders?
C) what effects will this action have on our stakeholders?
D) can we make money with this action?
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Chapter 8: Managerial and Organizational Ethics
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Q1) Personal and managerial ethics entails making decisions.
A)True
B)False
Q2) The moral tone of an organization is set by
A) the board of directors.
B) regulatory agencies.
C) top management.
D) first line managers.
Q3) Being forthright, sincere, and honest in communicating with others is referred to as A) candor.
B) transparency.
C) feedback.
D) criticism.
Q4) Ethical leadership is founded on two pillars. These are A) rewards and punishments.
B) the manager as a moral person and a moral manager.
C) ethical climate and ethics training.
D) ethics principles and ethics tests.
Q5) Discuss the board of directors' role in the firm's ethical climate.
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Chapter 9: Business Ethics and Technology
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Q1) Technology is
A) the scientific method used in achieving a practical purpose.
B) the science of replacing human effort with mechanical power.
C) used primarily in the computer field.
D) the opposite of art.
Q2) Developing Internet policies, helping their companies avoid consumer litigation, and handling consumer complaints are all functions of a
A) chief executive officer (CEO).
B) chief operating officer (COO).
C) chief financial officer (CFO).
D) chief privacy officer (CPO).
Q3) Evaluate the use of GPS to monitor the activities and locales of employees.
Q4) A continuing concern in the realm of privacy issues is:
A) identity theft.
B) DNA duplication.
C) theft of intellectual property.
D) the distinction between "opting in" versus "opting out."
Q5) With regard to data security, data breaches are on the rise.
A)True
B)False
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Chapter 10: Ethical Issues in the Global Arena
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Q1) According to Transparency International's Corruption Perception Index (CPI), underdeveloped countries typically rank low in corruption.
A)True
B)False
Q2) Describe Earth Hour, and its growth. What has been its effect on awareness of global warming and climate change? Have you ever participated in Earth Hour in your community?
Q3) Which of the following is not a characteristic of sweatshops?
A) child labor
B) low pay
C) poor working conditions
D) forced prostitution
Q4) U.S. based MNCs are increasingly interested in cases brought under the Alien Tort Claims Act because
A) they could allow the firm to recoup some costs of incorporating overseas.
B) they could allow the firm to sue foreign firms on a reciprocal basis.
C) they provide an insight in the customs of the host country.
D) they are increasingly being named as defendants in tort cases for doing business in countries with repressive governments.
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Chapter 11: Business, Government, and Regulation
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Q1) There has always been a strong reaction in the United States to any form of industrial policy because:
A) It reduces the market's efficiency.
B) It conflicts with the widely held view of government's role in the economy.
C) Existing attempts to form industrial policies have generally been irrational and uncoordinated.
D) Industrial policies violate anti-trust legislation.
Q2) A 2015 Pew research survey found that respondents think the government is doing well on many issues except
A) setting workplace standards.
B) protecting the environment.
C) keeping us safe from terrorists.
D) cutting corporate taxes.
Q3) The opposite of privatization could be considered
A) creeping expropriation.
B) industrial policy.
C) subsidization.
D) federalization.
Q4) Why does government regulate business?
Q5) Describe the history of the U.S. government as to industries in distress.
Page 14
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Chapter 12: Business Influence on Government and Public Policy
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Q1) Suppose that tobacco companies are faced with the threat of legislation that would make all tobacco products illegal to sell. How would these companies keep this issue off the public agenda and out of the limelight?
Q2) Political accountability is:
A) arguing against corporate political spending.
B) making direct financial contributions.
C) raising unlimited amounts of money to support a political candidate.
D) responsibility for political actions and a willingness to answer for them.
Q3) The way in which most legislation gets passed is through special-interest politics. A)True B)False
Q4) Lobbyists have been identified as having very narrow self-interests. Apparently some of these interests go no further than lining their own pockets, with no regard for their clients' needs. Research the activities of Jack Abramoff and Michael Scanlon in connection with their representation of several Native American tribes and their gambling casinos.
Q5) What can be done to limit the influence of money on the political process?
Q6) Why might PACs lose their effectiveness?
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Chapter 13: Consumer Stakeholders: Information Issues
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Q1) A full warranty must contain certain features, including repair within a reasonable period of time at no charge
A)True
B)False
Q2) Information that provides potential purchasers with enough information to make the best choice among the options available is
A) adequate.
B) ambivalent.
C) minimal.
D) realistic.
Q3) Which of the following is not a problem associated with psychological appeals?
A) Products seldom deliver.
B) Stir emotions and manipulate consumers.
C) Less memorable than functions or features.
D) Take advantage of vulnerability.
Q4) Advertising claims that cannot be substantiated by evidence are termed A) misleading.
B) outlandish.
C) understatements.
D) exaggerated claims.
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Chapter 14: Consumer Stakeholders: Product and Service Issues
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Q1) How has business responded to consumer stakeholders over the years? What do you think made business respond more effectively to consumers?
Q2) The ethical theory based on the concept of duty that states that firms have a responsibility to comply with the terms of the sale, inform the customer about the product, not misrepresent anything, and not coerce the customer is
A) contractual theory.
B) due care theory.
C) social costs view.
D) caveat emptor.
Q3) Which of the following is not a way in which the Consumer Product Safety Commission works to reduce the risk of harm from consumer products?
A) developing voluntary standards within an industry
B) issuing and enforcing mandatory standards
C) lobbying Congress to pass new consumer protection laws
D) conducting research on potential product hazards
Q4) What is the controversy over "pink slime"?
Q5) What have been the impacts of new leadership in the CPSC?
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Q6) Describe the legal doctrine of absolute liability.
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Chapter 15: Sustainability and the Natural Environment
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Q1) People who prefer to invest in companies with sustainability programs are known as
A) sustainability investors
B) power investors
C) green investors
D) ethical investors
Q2) In the Montreal Protocol of 1987, most of the nations that produced or used CFCs agreed to
A) a gradual phase-out of those materials.
B) limit future use of CFCs to amounts produced in that year.
C) an immediate ban on all CFCs.
D) a quick phase-out of CFCs.
Q3) A mixture of wet and dry deposited material from the atmosphere causing higher than normal amounts of nitric and sulfuric acids is
A) acid rain.
B) smog.
C) ozone impact.
D) waste deposits.
Q4) Describe the basic problems of producing toxic substances.
Q5) Describe the major sources of pollution in the area where you live.
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Chapter 16: Business and Community Stakeholders
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Q1) Community involvement focuses on the contribution of A) employee time and talent.
B) financial resources.
C) gifts in kind.
D) used equipment.
Q2) Describe how a company can provide support to "survivors" of a layoff.
Q3) List and describe four main types of service programs according to the CECP. What do companies get out of these kinds of service?
Q4) What reasons to corporate executives use to justify corporate giving to the arts?
Q5) Business involvement in the community represents enlightened self-interest.
A)True
B)False
Q6) Which of the following is not a reason commonly given for community involvement?
A) moral justification.
B) positions the company to help themselves
C) companies can develop community support and trust.
D) a way to help employees build their resumés
Q7) Review the pros and cons of outsourcing.
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Q8) Delineate the arguments for and against the practice of cause-related marketing.
Chapter 17: Employee Stakeholders and Workplace Issues
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Q1) Due process is one of the most frequently proclaimed employee rights issues of the last decade.
A)True
B)False
Q2) The trend toward using Alternative Dispute Resolution (ADR) is growing.
A)True
B)False
Q3) Today's employees are looking for
A) competitive pay and benefits.
B) opportunities for professional growth.
C) meaningful work.
D) all of these.
Q4) The exception that protects employees from being fired because they refuse to commit crimes or take advantage of privileges to which they are entitled by law is
A) common law.
B) the employee protection principle.
C) the public policy exception.
D) the fair employment loophole.
Q5) Describe the range of duties covered by due process.
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Chapter 18: Employee Stakeholders: Privacy, Safety, and Health
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Q1) Integrity tests, unlike the polygraph, are not subject to legal constraints on their use.
A)True
B)False
Q2) Which of the following is not a principle that should guide corporate decision-making about the collection and use of employee information?
A) companies should base their information policies on FBI procedures that have stood the test of time.
B) companies should allow employees to correct any information that is inaccurate. C) when collecting information, it should only be used in ways that are appropriate.
D) companies should collect only that employee information that is absolutely necessary.
Q3) One study estimates that passive smoke was responsible for 2,400 lung cancer deaths, in one year, in the United States.
A)True
B)False
Q4) Describe some of the best family-friendly benefits that are provided to workers.
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Chapter 19: Employment Discrimination and Workplace
Diversity
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Q1) The Civil Rights Act of 1964 protects against sex discrimination, including people who have changed their sex.
A)True
B)False
Q2) Ethical blindness is
A) discrimination against blind workers..
B) refusing to see ethics as a business issue.
C) when decision makers behave unethically without being aware.
D) discrimination against the elderly.
Q3) Imagine that a female co-worker who is Latina is being sexually harassed by the man who supervises you both. You've seen it several times. You've asked her to report it, but she doesn't want to say anything, for many reasons. However you know that she does not welcome the harassment. What would you do? Should you try to help her? If you do, what are the risks for you?
Q4) Major life activities include all of the following except
A) learning.
B) thinking.
C) concentrating.
D) golfing.
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