Q&A Hero

Q: The great value of ______ is that it enabled corporations to raise the capital that was needed to finance the infrastructure that fueled the Industrial Revolution. A. limited liability B. the stock market C. centralized management D. high-frequency stock trades

Q: For which of the following events would a court intervene in a firms activities? A. A management decision to not insure a companys largest warehouse. B. A management decision to deceive customers about the negative effects of the companys products. C. A management decision to not invest in eco-friendly materials because they are less profitable. D. A management decision to not give raise to employees who have been at the company for more than 15 years.

Q: Which case lays the legal foundation for the belief in the primacy of shareholder interests? A. Miller v. Magline, Inc. B. SEC v. Transamerica Corporation C. Dodge v. Ford Motor Company D. Levin v. Mississippi River Corporation

Q: The ______ is the notion that shareholders cannot second-guess management decisions. A. management responsibility doctrine B. business judgment rule C. board of directors supremacy D. limited liability corporation

Q: During the early 20th century, which type of stakeholder become more and more favored in terms of legal decisions? A. employees B. owners C. communities D. investors

Q: In the early history of corporations, what was the primary purpose of shares? A. to raise capital and provide a return on that investment B. to encourage innovation C. to allow outsiders to control a corporations major decisions D. to implement social good by a corporation

Q: Which of the following is true about shareholders? A. Shareholders fully own a corporation. B. Shareholders have a right of possession of a corporation. C. Shareholder ownership is a social construction. D. Shareholders have the right of control over a corporation.

Q: How did the introduction of limited liability for firms change the focus of firms? A. profit became the primary purpose B. social good became the primary purpose C. innovation became the primary purpose D. the introduction of limited liability did not change firms focus

Q: What are the implications of the principle in U.S. corporate law that no one owns the corporation?

Q: How has the definition of what it means to be a shareholder changed over the history of the corporation?

Q: Why is the question of ownership central to the CSR debate? In your answer, provide specific examples of how ownership impacts CSR issues.

Q: Analyze the following statement: Shareholder ownership of firms is a social construction. What does this statement mean, and what are the implications for CSR?

Q: Shareholders definitively own the corporation in which they invest.

Q: U.S. courts often intervene in the business decisions of a firm to ensure that the firm is both maximizing profits and doing social good.

Q: A limited liability company is, in the eyes of the law, a person.

Q: A share is a legal contract between the investor and the firm.

Q: Existing securities are traded on the primary market.

Q: Since their inception in the United States, corporations have all been limited liability.

Q: Firms such as Unilever and Amazon are now changing their approach to business thinking by focusing on ______. A. societal outcomes B. climate change C. long-term focus D. globalization

Q: In Delaware, the part of the firm that is given preeminence is ______. A. the investor B. the board of directors C. the employees D. the chief executive officer

Q: In the event that a shareholder resolution is passed by a majority at a companys annual general meeting (AGM), in most cases the company is obliged to ______. A. take action immediately B. create a plan for implementation of the idea and present it to shareholders C. consider the proposal at its next board meeting D. do nothing

Q: Between 1870 and 1910, corporations were protected from legislation such as child labor laws by the ______. A. First Amendment B. Fifth Amendment C. Fourteenth Amendment D. Eighteenth Amendment

Q: The 1880 New Hampshire Supreme Court decision in Charlestown Boot & Shoe Co. vs. Dunsmore sets a legal precedent for ______. A. stakeholder theory B. the business judgment rule C. shareholder autonomy D. limited liability

Q: The business judgment rule is important because it reflects the principle that ______, not ______, have the greatest latitude to run companies. A. shareholders; company directors B. company directors; shareholders C. managers; company directors D. shareholders; managers

Q: The Dodge v. Ford case has often been used as the legal foundation for the belief that ______. A. the firm must place the interests of its shareholders over all other interests B. the firm must operate in the interests of all stakeholders C. the firm must place the interests of its managers over all other interests D. management has very little responsibility to shareholders in day-to-day operations

Q: The Dodge brothers sued Henry Ford because of his decision to ______. A. pay factory workers a living wage B. distribute surplus profit to shareholders in the form of a dividend C. reinvest profits in research and development rather than in shareholder dividends D. distribute surplus profit to customers in the form of lower prices for cars

Q: There is ______ legal precedent for the idea that managers and directors have a fiduciary responsibility to place shareholder interests over the interests of other stakeholders. A. no B. weak C. strong D. irrefutable

Q: The largest passive investor in corporations across the world is ______. A. BlackRock B. Vanguard C. State Street D. E.F. Hutton

Q: An advantage of the limited liability company (LLC) is that the organization is ______. A. recognized as an independent entity in the eyes of the law B. not recognized as a legal person and therefore cannot be sued C. provided tax-exempt status D. not liable for its own debts

Q: Which of the following does strategic CSR emphasize? A. short-term value creation B. meeting the needs of all stakeholders C. medium- to long-term value creation D. meeting the needs of primary stakeholders

Q: As the CEO of a publicly traded company, you decide your firm will no longer issue quarterly earnings reports to shareholders. A legitimate reason for your decision is ______. A. to emphasize the importance of medium- to long-term value creation B. to emphasize the importance of short-term financial strategies C. to encourage investors to buy stock in your company D. to discourage investors from buying stock in your company

Q: The regular issuance of quarterly earnings reports to shareholders illustrates which of the following? A. the long-term nature of investing for retirement B. the importance of stakeholder interests over shareholder interests C. the growing importance of CSR in business decisions D. the short-term focus of the economic system

Q: 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

Q: An analysis of the history of the corporation, a review of existing legislation, and legal precedent all support to the conclusion that ______. A. shareholders do not own the firm B. shareholders are the owners of the firm C. shareholders have the same power as managers of the firm D. shareholders must respect the rights of all stakeholders

Q: The fact that shareholders have the right to vote at the companys annual general meeting demonstrates that ______. A. shareholders can influence day-to-day operations of the firm B. shareholder democracy is neither strong nor broad C. shareholders have direct input on all interests of shareholders D. boards of directors will respond to shareholder concerns

Q: The U.S. Supreme Court has made several landmark rulings on corporate personhood. Some argue that the Courts decisions have used inconsistent logic. Describe why the Courts logic has or has not been inconsistent.

Q: Delaware is considered to be the friendliest place to do business in the United States. Describe the reasons why this is so as well as the positive and negative implications of the reasons.

Q: Describe the differences between Benefit Corporations and B Corps. Do you think either of these designations is necessary? Why or why not?

Q: One survey revealed that nearly 80% of executives admit they would take actions to improve quarterly earnings at the expense of long-term value creation. Why are they wrong?

Q: Describe the difference between traditional approaches to corporate social responsibility, which focus on objective outcomes, and strategic CSR, which focuses on value creation.

Q: What is corporate personhood, and how does it relate to corporate social responsibility?

Q: Limited liability means that no one can sue a corporation.

Q: The U.S. Supreme Court has held that corporations have the right to donate to political campaigns.

Q: A corporation is a fictitious legal person that is endowed with many of the characteristics of a human being.

Q: Value creation is the same for every business and every stakeholder.

Q: The textbook author argues that ______ offers the most efficient tools to deliver social progress. A. government B. for-profit firms C. not-for-profit firms D. families

Q: The Ben & Jerrys law passed by the Vermont legislature ______. A. requires ice cream to be provided to all schoolchildren at least once per year B. requires the use of only non-GMO ingredients in food products C. allows firms to set maximum pay for CEOs at 20 times the average pay in the firm D. allows firms to consider factors other than shareholder value when deciding whether to accept a takeover offer

Q: According to Yvon Chouinard, founder of the Patagonia company, one of the primary benefits of becoming a benefit corporation is that ______. A. it makes it harder for a new owner to abandon the firms social mission B. it makes employees more dedicated to the social mission of the firm C. it makes the companys products much more desirable to socially conscious customers D. it makes it more difficult for a company to pollute the natural environment

Q: The Stop BEZOS Act proposed by Senators Bernie Sanders and Elizabeth Warren sought to force companies to ______. A. unionize B. provide a livable wage C. ensure companies paid their fair share of taxes D. mandated companies not outsource

Q: Firms will survive in the long run to the extent that managers consistently create ______ for the firms broad range of stakeholders. A. profits B. goodwill C. value D. harmony

Q: Laws establishing benefit corporations impose legal requirements for firms to ______. A. implement a stakeholder model B. implement a shareholder model C. pay a living wage to all employees D. use only environmentally sustainable manufacturing processes

Q: The concept of corporate personhood in the United States recognizes that ______. A. corporations are primarily made up of groups of persons B. physical resources of corporations (buildings, machines, etc.) are secondary to human resources C. humans have a natural tendency to anthropomorphize inanimate objects such as buildings D. a corporation is a fictitious legal person that is endowed with many of the rights and responsibilities of a human being

Q: Compared to European firms, U.S. firms are ______. A. more likely to take a multiconstituency approach to CSR B. less likely to take a multiconstituency approach to CSR C. equally likely to take a multiconstituency approach to CSR D. much more socially responsible

Q: The incorporation process (corporate governance) in the United States is currently regulated ______. A. under state, rather than federal, law B. under federal, rather than state, law C. under both federal and state law D. under local, state, and federal law

Q: The decision in ______ allowed corporations greater freedom to finance political ads/campaigns. A. Buckley v. Valeo B. Citizens United C. Dartmouth College v. Woodward D. Dodge v. Ford

Q: Benefit corporations and certified B Corps are ______. A. legal entities in all states of the United States B. primarily located in European countries C. different names for the same types of companies D. different entities, one a legal entity and the other a certification process

Q: In the United States, the idea of the benefit corporation was established in which year? A. 1810 B. 1910 C. 1970 D. 2010

Q: In 2012, ______ became the first company in California to become a benefit corporation. A. Lululemon B. Google C. Apple D. Patagonia

Q: 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

Q: The ______ is typically recognized as the earliest modern business corporation. A. East India Company B. Ford Motor Company C. Lorillard Tobacco Company D. Southern Pacific Railroad

Q: Corporate governance is regulated by ______. A. the federal government B. the states C. the cities in which corporations reside D. the corporations themselves

Q: Dodge v. Ford stands for the legal principle that ______. A. managers and directors have a legal duty to put shareholders interests above all others B. managers, not shareholders, have the legal authority to determine workers wages C. the interests of multiple stakeholders must be considered in business practices D. corporations have a legal duty to act in socially responsible ways

Q: In Buckley v. Valeo, the U.S. Supreme Court ruled explicitly that ______. A. corporations have different tax liabilities than individuals B. corporations and individuals have common tax liabilities C. religious institutions cannot make political donations D. political donations are free speech

Q: Why is Dartmouth College v. Woodward an important case in CSR? A. It illustrates the important relationship between education and other societal institutions. B. It sets the legal precedent that corporations are understood to be legal individuals. C. It establishes legal autonomy for educational institutions to teach controversial subjects such as the theory of evolution. D. It sets the legal precedent of requiring state funding for public education.

Q: A corporations ______ is its responsibilities and obligations as determined by corporate law and founding corporate charters. A. direction B. general goal C. public purpose D. main objective

Q: What did the Citizens United case decide? A. Corporations enjoy the same First Amendment rights to free speech as individuals. B. The Bill of Rights applies to corporations. C. Corporations may vote. D. Corporations have a duty to protect their employees from discrimination.

Q: Which Supreme Court case initially developed the idea of corporate personhood? A. Santa Clara County v. Southern Pacific Railroad B. Trustees of Dartmouth College v. Woodward C. Buckley v. Valeo D. First National Bank of Boston v. Bellotti

Q: A corporation CANNOT do which of the following? A. sue and be sued B. be criminally prosecuted C. own property D. create law

Q: Buckley v. Valeo extended what right to a corporation? A. protection from unionization B. ability to donate to political campaigns C. ability to sue states D. right to privacy

Q: The law allowed the boards of directors of Vermont firms to consider factors in addition to shareholder value when deciding whether to accept a takeover offer is known as the ______. A. Vermont Maple Suger Growers Law B. Ben & Jerrys Law C. Mount Snow Association Law D. St. Johnsbury Transport Law

Q: If we are going to argue that a corporation has ______ we would like it to fulfill, we also need to grant ______ that protect its ability to exist and do what it is designed to do. A. responsibilities; rights B. rights; responsibilities C. purposes; rights D. responsibilities; immunities

Q: A ______ approach to corporate social responsibility allows the outcome to emerge, rather than imposing a fixed view about what should or should not happen. A. normative B. descriptive C. conservative D. critical

Q: A ______ approach to corporate social responsibility starts with a predetermined outcome and then works out how to achieve it. A. normative B. descriptive C. conservative D. critical

Q: 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.

Q: Which of the following exemplifies what the descriptive approach to corporate social responsibility is most concerned with? 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.

Q: The textbook argues that the CSR cause would be advanced considerably if stakeholders are caring, informed, transparent, and educated. Describe what that statement means, citing examples to support your response.

Q: What should the firm do if customers want to purchase a product that is not only bad for them (e.g., tobacco, alcohol, or fast food) but is also bad for society (e.g., higher health-care costs)?

Q: Arguments can be made that firms are primarily responsible for CSR practices, and other arguments can be made that stakeholders are primarily responsible for CSR. Describe the two sides to this debate and analyze which argument you support more.

Q: 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.

Q: The textbooks author states, We do not need more responsible companies; we need more responsible stakeholders. Analyze this statement, providing examples to support or refute it.