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Ethics - Exam 1

Terms in this set (108)

An ethical issue is a problem, situation, or opportunity
a. that has no correct answer.
b. that harms the environment.
c. requiring society as a whole to choose among several actions that must be evaluated as right or wrong.
d. requiring an individual, group, or organization to choose among several actions that must be evaluated as right or wrong, ethical or unethical.
e. requiring an individual, group, or organization to choose between harming consumers or the environment and earning more profits.
D. requiring an individual, group, or organization to choose among several actions that must be evaluated as right or wrong, ethical or unethical.
Ethical issues in business typically arise because of conflicts between individuals & personal moral philosophies and values and the:
a. values and attitudes of the organization in which they work.
b. values and attitudes of the society in which they live.
c. values and attitudes of the organization in which they work and the society in which they live.
d. laws and regulations of the country in which they live.
e. values and attitudes of their parents and religion.
C. values and attitudes of the organization in which they work and the society in which they live.
_________ is an important element of virtue and means being whole, sound, and in unimpaired condition.
a. Optimization
b. Ethical issue
c. Honesty
d. Trust
e. Integrity
E. Integrity
A court found an oil company guilty of placing profits over the safety and well-being of its employees. This situation can be classified as
a. ethical.
b. unethical.
c. an ethical issue.
d. a dilemma.
e. a justice issue.
C. an ethical issue.
A person uncomfortable with his employer & unspoken policy of hiring only white men is experiencing
a. a conflict of interest.
b. an ethical issue.
c. a feeling of guilt.
d. cognitive dissonance.
e. a moral attribute.
B. an ethical issue.
Issues related to fairness and honesty may arise because business is sometimes regarded as a:
a. legal case, where everything must be done to the letter of the law.
b. contest, with the most ethical firm "winning."
c. guerrilla war where anything goes in the fight for consumers & dollars.
d. game governed by its own rules rather than those of society.
e. game governed by the rules of society.
D. game governed by its own rules rather than those of society.
War metaphors are common in business. This kind of mindset can be dangerous for business leaders because:
a. it may lead executives to become violent.
b. it may foster the idea that honesty is unnecessary in business.
c. it may lead organizations to be excessively aggressive.
d. business is not like warfare and the metaphors are not appropriate.
e. business is more like a game than a war.
B. it may foster the idea that honesty is unnecessary in business.
Conflicts of interest exist when employees must choose whether to:
a. advance their own personal interests, those of the organization, or those of some other group.
b. advance the interests of the organization or those of society.
c. accept bribes or not.
d. carry out an assignment they perceive to be unethical.
e. report an unethical coworker.
A. advance their own personal interests, those of the organization, or those of some other group.
____________ is the offering of something of value in order to gain an illicit advantage.
a. Shoulder surfing
b. Hacking
c. Gift exchange
d. Conflicts of interest
e. Bribery
E. Bribery
Concerns involving copyright infringement on books, movies and music, and other illegally produced goods relate to which type of ethical issue?
a. Conflict of interest
b. Honesty
c. Communications
d. Discrimination
e. Intellectual property rights
e. Intellectual property rights
__________ is defined as any purposeful communication that deceives, manipulates, or conceals facts in order to create a false impression.
a. Stealing
b. Lying
c. Fraud
d. Misappropriation
e. Accounting fraud
c. Fraud
In marketing communications, lying causes predicaments for companies because it destroys:
a. trust.
b. honor.
c. confidence.
d. integrity.
e. products.
a. trust.
When a commercial states that a product is superior to any other on the market, the marketer risks accusations of:
a. concealed facts.
b. false labeling.
c. deceptive advertising.
d. concealed facts.
e. puffery.
e. puffery.
Optimization is defined as:
a. the quality of being just, equitable, and impartial.
b. a trade-off between equity and efficiency.
c. an interchange of giving and receiving in social relationships.
d. how wealth or income is distributed between employees within a company.
e. a lack of integrity, incomplete disclosure, and an unwillingness to tell the truth.
b. a trade-off between equity and efficiency.
Which of the following has been identified by the Ethics Resource Center as the leading form of observed misconduct in organizations?
a. Discrimination
b. Bullying
c. Lying
d. Misuse of company resources
e. Sexual harassment
d. Misuse of company resources
An activity is probably ethical if it:
a. is approved of by most individuals in the organization and is customary in the industry.
b. is approved of by no one in the organization, but has been carried out in the industry before.
c. is customary in the industry.
d. is not illegal.
e. does not make consumers feel cheated, deceived, or manipulated.
a. is approved of by most individuals in the organization and is customary in the industry.
The first step toward understanding business ethics is to:
a. know your company & ethical policies.
b. know your own morals and philosophies.
c. know society & ethical policies.
d. develop ethical-issue awareness.
e. develop a set of decision-making rules.
d. develop ethical-issue awareness.
Among retail stores, is a larger problem than customer shoplifting.
a. poor stock performance
b. weak leadership
c. internal employee theft
d. misuse of merchandise
e. employee dissatisfaction
c. internal employee theft
The ethical decision-making process begins
a. with a conflict of interest.
b. when an individual experiences a conflict between his or her values and those of his or her firm.
c. when stakeholders trigger ethical issue awareness and individuals openly discuss it with others.
d. with a conflict in values.
e. when an individual experiences a conflict between his or her values and those of society.
c. when stakeholders trigger ethical issue awareness and individuals openly discuss it with others.
Which of the following is not a side-effect of being the victim of workplace bullying?
a. Increased productivity
b. Sleep disturbance
c. Depression
d. Increased sick days
e. Stomach problems
a. Increased productivity
Accountants must abide by a strict code of ethics that defines their responsibilities to
a. their clients only.
b. their clients and the public interest.
c. the public only.
d. their investors and shareholders.
e. government regulators.
b. their clients and the public interest.
Which of the following statements is most correct?
a. Affirmative action programs require quotas to govern employment decisions.
b. Affirmative action programs have eliminated discrimination in employment.
c. Affirmative action programs are required in all organizations by law.
d. Affirmative action programs involve efforts to recruit, hire, train, and promote qualified individuals from groups
that have traditionally been discriminated against on the basis of race, gender, or other characteristics.
e. Affirmative action programs involve efforts to avoid recruiting, hiring, training, and promoting qualified individuals from groups that have traditionally been discriminated against on the basis of race, gender, or other characteristics.
d. Affirmative action programs involve efforts to recruit, hire, train, and promote qualified individuals from groups
that have traditionally been discriminated against on the basis of race, gender, or other characteristics.
Which of the following is not a question you need to ask when you suspect that workplace bullying has occurred?
a. Is your boss treating you well and compensating you adequately?
b. Is your boss asking obviously impossible things from you without training and stating that, once completed, the work is never good enough?
c. Are surprise meetings called without your knowledge?
d. Have others at work told you to stop working, talking, or socializing with them?
e. Are you never left alone to do your job without interference?
a. Is your boss treating you well and compensating you adequately?
_________ is associated with a hostile workplace where someone considered a target is threatened, harassed, belittled, or verbally abused.
a. A code of conduct
b. Sexual harassment
c. Coercive power
d. Bullying
e. Rewards
d. Bullying
Which of the following is not a consequence of ethical misconduct?
a. Decreased reputation
b. Shaken customer loyalty
c. Reduced investor confidence
d. Increased sales
e. Legal actions by wronged parties
d. Increased sales
The Age Discrimination in Employment Act specifically outlaws hiring practices that discriminate against people
a. who are under the age of 18.
b. who are between 16 and 20.
c. who are between 39-69.
d. who are past retirement age.
e. who are younger than 18 and older than 49.
c. who are between 39-69.
Abusive or intimidating behavior is the most common ethical problem for employees. Which of the following is not related to this concept?
a. Physical threats
b. False accusations
c. Being annoying
d. Profanity
e. Performance probation
e. Performance probation
The _________ makes it illegal for individuals, firms, or third parties doing business in American markets to "make payments to foreign government officials to assist in obtaining or retaining business."
a. U.S. Foreign Corrupt Practices Act (FCPA)
b. Kyoto Protocol
c. World Trade Organization (WTO)
d. Consumer Protection Act
e. Gramm-Leach- Bliley Act
a. U.S. Foreign Corrupt Practices Act (FCPA)
Mr. Smith told his client, Mr. Jabar, who was not an IT expert, that the new software systems were much better
than his existing ones. To convince Mr. Jabar, Mr. Smith used a great deal of technical jargon that his client did not
really understand. Mr. Smith did this intentionally to confuse Mr. Jabar. This is an example of:
a. false advertising.
b. commission lying.
c. omission lying.
d. noise.
e. surrogate lying.
d. noise.
________________ involves tricking individuals into revealing their passwords or other valuable corporate information.
a. Shoulder surfing
b. Remote hacking
c. Social engineering
d. Physical hacking
e. Dumpster diving
c. Social engineering
When Devon looked at what another employee was typing in order to get a password, he committed:
a. shoulder surfing.
b. whacking
c. discrimination
d. password guessing
e. hacking
a. shoulder surfing.
A company can be sued for discrimination if it:
a. hires minorities.
b. maintains reasonable minority standards.
c. discharges a minority individual, but has a just cause for doing so.
d. uses age as a hiring or firing criterion.
e. has more men than women on staff.
d. uses age as a hiring or firing criterion.
Affirmative action programs:
a. involve the promotion of unqualified employees.
b. are not imposed by federal law on employers.
c. are not very commonly used anymore because there is no need to protect minorities.
d. only involve the training of individuals.
e. involve the recruitment, hiring, promotion, and training of qualified individuals.
e. involve the recruitment, hiring, promotion, and training of qualified individuals.
What type of fraud involves intentional deception on the part of an individual or group in order to derive an unfair
economic advantage over an organization?
a. Channel
b. Integrative
c. Consumer
d. Product
e. Conventional
c. Consumer
What type of fraudulent activity could involve a consumer staging an accident to seek damages?
a. Whacking
b. Duplicity
c. Guile
d. Defamation
e. Collusion
b. Duplicity
What type of fraudulent activity involves an employee who assists a consumer in fraud?
a. Whacking
b. Duplicity
c. Guile
d. Defamation
e. Collusion
e. Collusion
Prior to the financial meltdown, bond ratings agencies were accused of having ________ because they were paid by the
organizations that they rated. The organizations would shop around for the agency that gave them the best rating.
a. high ethical standards
b. excessively complicated systems
c. a hostile workplace
d. conflicts of interest
e. a good business model
d. conflicts of interest
__________ are used to obtain or retain business and are not generally considered illegal in the U.S.
a. Facilitation payments
b. Bribes
c. Gifts
d. Coercive techniques
e. Threats
a. Facilitation payments
Principles are
c. specific and pervasive boundaries for behavior that are universal and absolute.
Social responsibility is
a. an organization's obligation to maximize its positive effects and minimize its negative effects on stakeholders.
The ______ was/were enacted to restore confidence in financial reporting and business ethics after the accounting

scandals of the early 2000s.
b. Sarbanes-Oxley Act
The term business ethics is best described by the following statement:
e. It comprises the principles, values, and standards that guide behavior in the world of business.
Which of the following is not one of the rights spelled out by John F. Kennedy in his "Consumers' Bill of Rights"?
d. The right to be ethical
During the 1990s the institutionalization of business ethics was largely driven by which piece of legislation?
Federal Sentencing Guidelines for Organizations
Business ethics, as a field, has passed through which of the following states?
Theological discussion to recognition of social issues to a field of study
The 1960s saw a rise of consumerism. What is consumerism?
Activities undertaken by independent individuals, and groups to protect their rights as consumers
Ethics is a part of decision making
at all levels of work and management.
Which of the following was developed in the 1980s to guide corporate support for ethical conduct by establishing a method for discussing best practices?
Defense Industry Initiative on Business Ethics and Conduct
The _______ focus(es) on firms taking action to prevent and detect business misconduct in cooperation with
government regulation.
Federal Sentencing Guidelines for Organizations
The study of business ethics is important to better understand all of the following except
that business ethics is entirely an extension of an individual's own personal ethics.
According to the role of ethical culture in performance, all of these are drivers of profit except
opportunity for misconduct.
More than a compliance program, business ethics is becoming
a management issue to achieve competitive advantage.
. Having acceptable personal ethics is probably not going to be sufficient to handle complex business ethical issues when an individual has
limited business experience.
One of the major ethical issues President Obama's administration focused on was
health care and consumer protection.
Which of the following is generally not considered a business ethics issue?
Corporate hierarchy
Which represented a far-reaching change to organizational control and accounting systems, making securities fraud a criminal offense?
Sarbanes-Oxley Act.
The Foreign Corrupt Practices Act outlawed
bribery of officials in other countries.
Which of the following was not a provision of the Sarbanes-Oxley Act?
It outlawed bribery of officials in other countries.
Which of the following is not cited as an example of a global collaborative effort to establish standards of business conduct?
United States Sentencing Commission
Because of Sarbanes-Oxley, publicly traded companies must develop financial reporting.
code of ethics
______is essential in building long-term relationships between businesses and consumers.
trust
The Dodd-Frank Wall Street Reform and Consumer Protection Act
was designed to make the financial services industry more responsible.
In the Reagan/Bush eras, the major focus of the business world was on
self-regulation rather than regulation by government.
The six principles of the Defense Industry Initiative on Business Ethics and Conduct became the foundation for
. the Federal Sentencing Guidelines for Organizations
Ethical culture is defined as
acceptable behavior as defined by the company and industry.
The Federal Sentencing Guidelines for Organizations set the tone for organizational ethics compliance programs by
codifying into law incentives for organizations to take action such as developing ethical compliance programs
to prevent misconduct.
Which of the following statements about the Federal Sentencing Guidelines for Organizations is false?
They use a routine mechanical approach that forces all firms to use the same means to avert serious penalties.
Which of the following is not one of the benefits of being ethical and socially responsible in business?
A high degree of employee dissent
Employees' perceptions of their firm as having an ethical climate leads to
enhanced performance.
Employees feel less pressure to compromise ethically, observe less misconduct, are more satisfied with their organizations, and feel more valued when
they see honesty, respect, and trust applied in the workplace.
Investors are concerned about business ethics because they know that misconduct can
lower stock value and prices.
Most organizations with strong ethical climates usually focus on the core value of placing ________ interests first.
customers'
Which of the following is not something a firm might do to encourage organizational ethics and compliance?
Ignoring potential ethical issues
1. Those who have a claim in some aspect of a firm's products, operations, markets, industry, and outcomes are known as

a. shareholders.
b. stockholders.
c. stakeholders.
d. claimholders.
e. special-interest groups
C
2. Stakeholders' power over businesses stems from their

a. ability to withdraw or withhold resources.
b. ability to generate profits.
c. media impact.
d. political influence.
e. stock ownership.
A
3. Which of the following do not typically engage in transactions with a company and thus are not essential for its survival?

a. Employees
b. Secondary stakeholders
c. Primary stakeholders
d. Investors
e. Customers
B
4. A firm that makes use of a __________ recognizes other stakeholders beyond investors, employees, and suppliers, and explicitly acknowledges the two-way dialog that exists between a firm's internal and external environments.

a. stakeholder model of corporate governance
b. stakeholder bias
c. code of ethics
d. stakeholder interaction model
e. corporate interface mode
D
5. The degree to which a firm understands and addresses stakeholder demands can be referred to as

a. a stakeholder orientation.
b. a shareholder orientation.
c. the stakeholder interaction model.
d. a two-way street.
e. a continuum.
A
6. Which of the following industries tends to generate a high level of trust from consumers and stakeholders?

a. Insurance
b. Technology
c. Banks
d. Mortgage lenders
e. Financial services
B
7. Which of the following is not a benefit that primary stakeholders tend to provide to organizations?

a. Supplies of capital and resources.
b. Expertise and leadership
c. Word-of-mouth promotion
d. Infrastructure
e. Pro-bono bookkeeping
E
8. A stakeholder group that is absolutely necessary for a firm's survival is defined as

a. direct.
b. tertiary.
c. secondary.
d. special-interest.
e. primary.
E
9. When unethical acts are discovered in a firm, in most instances

a. they are caused by unwilling participants.
b. the cause is due to external stakeholders.
c. the perpetrators are caught and prosecuted.
d. there was knowing cooperation or complicity from within the company.
e. the cause is a corrupt Board of Directors.
D
10. Which of the following is not a method typically employed by firms when researching relevant stakeholder groups?

a. Surveys
b. Focus groups
c. Internet searches
d. Press reviews
e. Guessing
E
11. A stakeholder orientation can be viewed as a(n)

a. necessity for business success.
b. continuum.
c. polarizing concept.
d. good marketing ploy.
e. expensive proposition.
B
12. Shareholders provide resources to an organization that are critical to long term success. Which of the following does the book suggest that suppliers offer?

a. The promise of customer loyalty
b. Material resources and/or intangible knowledge
c. Infrastructure
d. Revenue
e. Leadership skills
B
13. Which of the following is not associated with the stakeholder interaction model?

a. Involves a two-way relationship between firm and stakeholders
b. Recognizes the input of investors, employees, and suppliers
c. Explicitly acknowledges dialogue with a firm's internal environment
d. Explicitly acknowledges dialogue with a firm's external environment
e. Identifies the mass media, special interest groups, competitors, and trade associations as primary stakeholders
E
14. The first of the three activities that are associated with the stakeholder orientation is the

a. organization-wide generation of data.
b. organization's responsiveness to intelligence.
c. set of consumer attributes identified.
d. organizational strategy of target markets.
e. human relations department's set of priorities.
A
15. Public health and safety and support of local organizations are issues most relevant to which stakeholder group?

a. Investors
b. Community
c. Suppliers
d. Customers
e. Employees
B
16. Minimizing the use of energy and reducing emissions and waste are issues of importance to which stakeholder?

a. Environmental groups
b. Suppliers
c. Employees
d. Industry leaders
e. Investors
A
17. The idea that the mission of business is to produce goods and services at a profit, thus maximizing its contribution to society is associated with

a. Adam Smith.
b. Theodore Levitt.
c. Norman Bowie.
d. Herman Miller
e. Milton Friedman.
E
18. The originator of the idea of the invisible hand, which is a fundamental concept in free market capitalism, was

a. Adam Smith
b. Theodore Levitt.
c. Norman Bowie.
d. Herman Miller
e. Milton Friedman.
A
19. Some economists believe that if companies address economic and legal issues, they are satisfying the demands of society, and that trying to anticipate and meet additional needs would be almost impossible. Which economist's theory are they following most closely with this belief?

a. Adam Smith.
b. Theodore Levitt.
c. Norman Bowie.
d. Herman Miller
e. Milton Friedman.
E
20. In ascending order, Carroll's four levels of social responsibility are

a. ethical, legal, economic, philanthropic.
b. economic, ethical philanthropic, legal.
c. economic, legal, ethical, philanthropic.
d. legal, ethical, economic, philanthropic.
e. ethical, legal, moral, economic
C
21. The term used to express how a firm meets its stakeholder expectations of its economic, legal, ethical, and philanthropic responsibilities is

a. reputation.
b. corporate citizenship.
c. corporate ethical audit.
d. ethical citizenship.
e. fiduciary duties.
B
22. In corporate governance, _ is the process of auditing and improving organizational decisions and actions.

a. profit
b. loyalty
c. accountability
d. control
e. diligence
D
23. Accountability, oversight, and control all fall under the definition and implementation of corporate

a. profit.
b. loyalty.
c. care.
d. governance.
e. diligence.
D
24. Major corporate governance issues normally involve _______ decisions.

a. strategic-level
b. tactical-level
c. divisional-level
d. marketing-level
e. accounting-level
A
25. Which of the following is a major ethical concern among corporate boards of directors?

a. Compensation
b. The non-traditional directorship approach
c. Dividend reporting
d. Corporate social audits
e. Debt swaps
A
26. One policy to address the issue of executive pay was implemented by J.P. Morgan, it stated that _________

a. there should be no limit on what top executives can earn.
b. managers should earn no more than twenty times the pay of other employees.
c. top managers should make the same amount as other employees.
d. employees can determine how much managers make.
e. the government should determine the worth of each manager's service.
B
27. The specific steps for implementing the stakeholder perspective do not include which of the following?

a. Identifying stakeholder groups
b. Identifying stakeholder issues
c. Identifying and gaining stakeholder feedback
d. Identifying and gaining government feedback
e. Assessing organizational commitment to social responsibility groups
D
28. What are the four levels of social responsibility?

a. Financial, religious, ethical, and philanthropic
b. Ethical, philanthropic, selfish, and short-sighted
c. Economic, long-term, ethical, and philanthropic.
d. Legal, economic, ethical, and philanthropic
e. Economic, compliance, legal, and philanthropic
D
29. The _____ model is founded in classic economic precepts.

a. economic
b. shareholder
c. stakeholder
d. board
e. ISO
B
30. Which of the following are not typically secondary stakeholders?

a. Television news anchors
b. Special-interest groups
c. Customers
d. Trade associations
e. Journalists
C
31. Which of the following are not typically primary stakeholders?

a. Customers
b. Trade associations
c. Employees
d. Shareholders
e. Suppliers
B
32. Why do critics argue that high compensation for boards of directors is a bad thing?

a. It is too expensive for the organization.
b. It could cause conflicts of interest between the directors and the organization.
c. It is not fair to poorly compensated employees.
d. High pay will render the board less complacent.
e. Board of director compensation is not a major issue.
B
33. Board members being linked to more than one company is an example of

a. strategic philanthropy.
b. stakeholder commitment.
c. interlocking directorate.
d. conflict of interest.
e. an illegal activity.
C
34. What is the first step in implementing a stakeholder perspective in an organization?

a. Identifying resources and determining urgency
b. Identifying stakeholder groups
c. Identifying stakeholder issues
d. Assessing the corporate culture
e. Assessing organizational commitment to social responsibility
D
35. A stakeholder orientation is not complete unless it includes

a. clear accounting procedures.
b. major financing activities.
c. marketing strategy.
d. feedback from special-interest groups.
e. activities that actually address stakeholder issues.
E
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