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Business Ethics
Q:
Which of the following is true of excessive compensation packages?
a. When executive compensation is tied to stock price, executives have a strong incentive to focus on long-term corporate interests rather than short-term stock value.
b. When huge amounts of compensation depend on quarterly earnings reports, there is a strong incentive to manipulate those reports in order to achieve the money.
c. Economic fairness and personal morality always exists in executives receiving lofty compensation packages.
d. Excessive compensation packages serve corporate interests when they provide an incentive that is not based on executive performance or accomplishments.
Q:
According to Kevin Bahr, which of the following is a cause for conflicts in the financial markets?
a. The independence and lack of expertise of audit committees
b. The presence of shareholder activism
c. Long-term executive greed versus short-term shareholder wealth
d. Self-regulation of the accounting profession
Q:
Tom, an employee of Electronixx, adjusted credits and debits of the companys ledger to show high profits. He also created false documents, underreported his income, and evaded paying taxes for a year. Tom can be convicted for _____.
a. unethical insider trading
b. conflicts of interest in corporate governance
c. conflicts of interest in accounting
d. unfair executive excessive compensation
Q:
Which of the following are additional ethical responsibilities board members should have beyond legal obligations?
a. They should maintain closed conversations within the firm.
b. They should refrain from providing oversight.
c. They should be critical in their inquiries about corporate vulnerabilities.
d. They should pay out a significant amount of the companys sustainable growth dollars to its chief executives in compensation.
Q:
Which of the following is true of Federal Sentencing Guidelines for boards?
a. The board must be knowledgeable about the objectives and process of the ethics program rather than simply the mere contents of a training session.
b. The board should avoid exercising reasonable oversight with respect to the effectiveness and implementation of the ethics program.
c. The board should leave the evaluation of all board policies, procedures, governance structure, and position descriptions to the executives.
d. The board need not work with executives to analyze the incentives for ethical behavior.
Q:
Which of the following duties of board members suggests that conflicts of interest are always to be resolved in favor of the corporation?
a. Duty of care
b. Duty of good faith
c. Duty of candor
d. Duty of loyalty
Q:
Identify the duty of obedience according to which board members should strive toward corporate objectives, and are not permitted to act in a way that is inconsistent with the central goals of the organization?
a. Duty of care
b. Duty of good faith
c. Duty of candor
d. Duty of loyalty
Q:
Which of the following legal duties of board members suggests that a director does not need to be an expert or actually run the company?
a. Duty of care
b. Duty of good faith
c. Duty of candor
d. Duty of loyalty
Q:
Which of the following is true of the COSO controls and the Sarbanes-Oxley requirements?
a. They result in less transparency in ensuring ethical corporate governance.
b. They encourage greater accountability for financial stewardship.
c. They result in a lesser emphasis to prevent any financial misconduct.
d. They do not impact executives, boards, and internal audits.
Q:
According to the COSO framework, which of the following is true of internal control?
a. It is not geared to the achievement of objectives in overlapping categories.
b. It can provide absolute assurance to an entitys board.
c. It is an end in itself, not a means to an end.
d. It is affected by people at every level of an organization.
Q:
Which of the following COSO elements provides assessment capabilities and uncovers vulnerabilities?
a. Risk assessment
b. Information and communications
c. Control activities
d. Ongoing monitoring
Q:
Identify the COSO element that is directed at supporting the control environment through fair and truthful transmission of facts.
a. Risk assessment
b. Information and communications
c. Control activities
d. Ongoing monitoring
Q:
Which of the following elements of COSO refers to policies and procedures that support the cultural issues such as integrity, ethical values, competence, philosophy, and operating style?
a. Ongoing monitoring
b. Information and communications
c. Control activities
d. Risk assessment
Q:
Which of the following elements of COSO sets the tone or culture of a firm?
a. Ongoing monitoring
b. Information and communications
c. Risk assessment
d. Control environment
Q:
Which of the following statements is true of the Committee of Sponsoring Organizations?
a. It improves financial reporting through a combination of controls and governance standards called the External ControlIntegrated Framework.
b. It is an external mechanism that seeks to ensure ethical corporate governance.
c. It describes control as encompassing those elements of an organization that, taken together, support people in the achievement of the organizations objectives.
d. It replaced the Sarbanes-Oxley Act to ensure ethical corporate governance.
Q:
Which of the following is an internal mechanism that seeks to ensure ethical corporate governance?
a. European Union 8th Directive
b. The Sarbanes-Oxley Act
c. The COSO framework
d. European Union 7th directive
Q:
Identify the external mechanism that seeks to ensure ethical corporate governance.
a. The Sarbanes-Oxley Act
b. The COSO framework
c. The European Union 7th Directive
d. The European Union 4th Directive
Q:
Which of the following is a criticism of the Sarbanes-Oxley Act?
a. It excludes requirements for certification of documents by officers.
b. It imposes extraordinary financial costs on the firms.
c. It does not require lawyers to report concerns of wrongdoing if not addressed.
d. It does not require codes of ethics for senior financial officers.
Q:
_____ of the Sarbanes-Oxley Act addresses the disclosure of audit committee financial expert.
a. Section 404
b. Section 301
c. Section 407
d. Section 307
Q:
Section 406 of the Sarbanes-Oxley Act addresses the:
a. rules of professional responsibility for attorneys.
b. codes of ethics for senior financial officers.
c. management assessment of internal controls.
d. services outside the scope of auditors.
Q:
Section 404 of the Sarbanes-Oxley Act addresses the:
a. rules of professional responsibility for attorneys.
b. codes of ethics for senior financial officers.
c. management assessment of internal controls.
d. services outside the scope of auditors.
Q:
Explain the concept of eco-efficiency, biomimicry and cradle-to-cradle responsibility.
Q:
Explain with an example, how eco-efficiency can be implemented on an individual and a business scale.
Q:
What are the general principles that will guide the movement of businesses toward sustainability?
Q:
Briefly describe the reasons supporting the practice of sustainability within businesses.
Q:
Explain Herman Dalys economic system model also known as the sustainable model.
Q:
Describe Herman Dalys concepts of sustainable development and the circular flow model.
Q:
Why was the Brundtland Commission formed?
Q:
Describe the challenges associated with the regulatory approach to environmental concerns.
Q:
List the various laws related to governmental regulation of the environment. Describe the method of addressing environmental concerns prior to the establishment of laws.
Q:
What do defenders of the market approach to environmental responsibilities state about the ability of economic markets to achieve a sound environmental policy? Discuss if their responses are environmentally adequate.
Q:
Discuss the challenges associated with the efficient market approach to environmental responsibilities.
Q:
What is an optimal level of pollution?
Q:
Discuss the market-based approach to resolving environmental challenges.
Q:
Elaborate on the conservation movement.
Q:
Explain how business understands the opportunities available in the age of sustainability.
Q:
A _____ economy interprets consumer demand as a demand for servicesfor clothes cleaning, floor covering, illumination, entertainment, cool air, transportation, word processing, and so forth.
Q:
The _____ responsibility holds that a business should be responsible for incorporating the end results of its products back into the productive cycle.
Q:
The ultimate goal of _____ is to eliminate waste altogether rather than reducing it.
Q:
While the regulatory and compliance model tends to interpret environmental responsibilities as constraints upon business, the _____ model is more forward looking and may present business with greater opportunities than burdens.
Q:
The _____ model does not differentiate natural resources from the other factors of production.
Q:
The concept of sustainable development can be traced to a 1987 report from the United Nations World Commission on Environment and Development (WCED), more commonly known as the _____ Commission.
Q:
Before environmental legislation was enacted, the primary legal avenue open for addressing environmental concerns was _____ law.
Q:
In economic terms, all resources are _____, that is, they can be replaced by substitutes, and in this sense resources are infinite.
Q:
A _____ approach to resolving environmental challenges suggests that environmental problems are economic problems that deserve economic solutions.
Q:
The _____ movement made the case that business had good reasons for conserving natural resources, reasons that paralleled the rationale to conserve financial resources.
Q:
Which of the following is true of a service-based economy?
a. A service-based economy tends to the consumers demand for clothes cleaning, floor covering, illumination, entertainment, and so forth.
b. A service-based economy interprets consumer demand as a demand for washing machines, carpets, lights, consumer electronics, and so forth.
c. A service-based economy weakens the production efficiencies.
d. A service-based economy increases material and energy costs significantly.
Q:
Which of the following responsibilities entail an incentive to redesign products so that they can be recycled efficiently and easily?
a. Cradle-to-grave
b. Backcasting
c. Cradle-to-cradle
d. Eco-efficiency
Q:
Which of the following holds that a business should be responsible for incorporating the end results of its products back into the productive cycle?
a. Backcasting
b. Cradle-to-cradle
c. Take-make-waste
d. Cradle-to-grave
Q:
Which of the following would hold a business liable for groundwater contamination caused by its products even years after they had been buried in a landfill?
a. Backcast model
b. Eco-efficiency model
c. Take-make-waste model
d. Cradle-to-grave model
Q:
Cradle-to-grave and cradle-to-cradle responsibilities are part of the _____ sustainable business principle.
a. eco-efficiency
b. backcasting
c. biomimicry
d. take-make-waste
Q:
Which of the following holds that a business is responsible for the entire life of its products, including the ultimate disposal even after the sale?
a. The cradle-to-grave model
b. The take-make-waste appoach
c. The cradle-to-cradle model
d. The eco-efficiency principle
Q:
Which of the following suggests that a business takes resources, makes products out of them, and discards whatever is left over?
a. The cradle-to-grave model
b. The take-make-waste approach
c. The Cradle-to-cradle model
d. The eco-efficiency principle
Q:
Closed-loop production seeks to integrate what is presently waste, back into production. In an ideal situation, the waste of one firm becomes the resource of another, and such synergies can create eco-industrial parks. This principle is often referred to as:
a. biomimicry.
b. eco-efficiency.
c. biosynergy.
d. backcast.
Q:
Which of the following recommends cycling the waste of one activity into the resource of another?
a. The biomimicry principle
b. The cradle-to-grave model
c. The cradle-to-cradle model
d. The eco- efficiency principle
Q:
Estimates suggest that with present technologies, businesses can readily achieve at least a fourfold increase in efficiency, and perhaps as much as a tenfold increase. This can be achieved through the first principle of sustainability known as:
a. biomimicry.
b. eco-efficiency.
c. the cradle-to-cradle responsibility.
d. the take-make-waste model.
Q:
Which of the following is true of the sustainability model in terms of environmental responsibilities?
a. Sustainability reduces competitive advantage.
b. Sustainability is not a prudent long-term strategy.
c. Sustainability is a good risk management strategy.
d. Sustainability leads to reduced cost-savings.
Q:
Which of the following is true of the sustainability model in terms of environmental responsibilities?
a. Sustainability need not be a long-term strategy.
b. The huge unmet market potential among the worlds developing economies
can only be met in sustainable ways.
c. Sustainable practices lead to reduced cost savings.
d. Firms that follow sustainable practices lose competitive advantage.
Q:
Over the long term, resources and energy cannot be used, nor waste produced, at rates at which the biosphere cannot replace or absorb them without jeopardizing its ability to sustain life. These are what Herman Daly calls the:
a. economic limitations.
b. backcasting effect.
c. biophysical limits to growth.
d. un-expandable boundaries.
Q:
The model of economy, in consistency with the second law of thermodynamics, implies that:
a. the amount of re-usable products decreases with an increase in production.
b. the economy exists beyond a finite biosphere.
c. wastes are not produced at each stage of economic activity.
d. the amount of usable energy decreases over time.
Q:
According to the _____ law of thermodynamics (the conservation of matter/energy), neither matter nor energy can truly be created, it can only be transferred from one form to another.
a. first
b. second
c. third
d. fourth
Q:
According to economist Herman Daly, neoclassical economics, with its emphasis on economic growth as the goal of economic policy will inevitably fail to meet these challenges:
a. if it suggests that the population of the world needs to be controlled.
b. unless it recognizes that the economy is but a subsystem within earths biosphere.
c. unless it recognizes that resources are infinite.
d. if it focuses on recycling and reusing the by-products of the production process.
Q:
The possibility that the economy cannot grow indefinitely is simply not part of the:
a. three pillars of sustainability approach.
b. circular flow model.
c. triple bottom line approach.
d. bilinear model.
Q:
Which of the following is true of the circular flow model?
a. It differentiates natural resources from the other factors of production.
b. It suggests that to keep up with the economy, the population must grow.
c. It treats economic growth as both the solution to all social ills and also as boundless.
d. It argues that the economy cannot grow indefinitely.
Q:
Which of the following models does not differentiate natural resources from the other factors of production and does not explain the origin of resources?
a. The circular flow model
b. The triple bottom line model
c. The bilinear model
d. The sustainability model
Q:
Which of the following is true of the Brundtland Commission?
a. It was named as the Brundtland Commission after the place in Norway, where the summit was conducted for the first time.
b. It was charged with developing recommendations for paths toward economic and social development at the expense of underdeveloped and developing countries.
c. It defined sustainable development as development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
d. It criticized the report from the United Nations World Commission on Environment and Development published in 1987.
Q:
Which of the following was charged with developing recommendations for paths toward economic and social development that would not achieve short-term economic growth at the expense of long-term environmental and economic sustainability?
a. The Bluewash Commission
b. The Binding Commission
c. The Barentsburg Commission
d. The Brundtland Commission
Q:
The three goals of sustainable development that include economic, environmental, and ethical sustainability are referred to as the:
a. tripartite goals.
b. three pillars of sustainability.
c. three pronged charter.
d. shoulders of sustainability.
Q:
Which of the following is true about the concept of sustainable development and sustainable business practice?
a. It suggests a radically new vision for integrating financial and environmental goals, compared to the growth model that preceded it.
b. According to this concept, only individuals who can prove that they had been harmed by pollution can raise legal challenges.
c. According to this concept, an economic solution to compensation should be offered for the harm only after the harm has been done.
d. It focuses only on the costs that businesses incur in pursuing environmental goals.
Q:
Which of the following is a problem associated with the regulatory approach to environmental challenges?
a. The regulatory model assumes that economic growth is environmentally and ethically benign.
b. If people rely on the law to protect the environment, environmental protection will extend beyond the law.
c. Business passively responds to consumer desires and consumers are unaffected by the messages that business conveys.
c. National regulations are the only means to effectively address international environmental challenges.
Q:
Which of the following is true about the regulatory approach to environmental challenges?
a. It overestimates the influence that business can have on establishing the law.
b. The government established regulatory standards to offer compensation after the occurrence of pollution or any other environmental harm.
c. It shifted the burden from those threatened with harm to those who would cause the harm.
d. This approach ensures that business does not pursue any financial opportunities that cause harm to the environment.
Q:
Before environmental legislation was enacted, the primary legal avenue open for addressing environmental concerns was:
a. tort law.
b. international law.
c. public law.
d. criminal law.
Q:
Markets can work to prevent harm only through information supplied by the existence of market failures. This is better known as the:
a. biomimicry effect.
b. backcasting problem.
c. first-generation problem.
d. primary market effect.
Q:
Which of the following causes inadequacy in ad hoc attemptsinternalizing external costs and assigning property rights to unowned goods such as wild speciesto repair market failures?
a. The backcasting problem
b. The fungibility problem
c. The biomimicry problem
d. The first-generation problem
Q:
Which of the following ways can lead market failure to serious environmental harm?
a. Creating abundant markets to create a price for important social goods
b. Making no distinction between individual decisions and group consequences
c. Inexistence of externalities in the economic exchange system
d. Assigning property rights to unowned goods
Q:
Which of the following is true about the market-based approach to environmental responsibility?
a. Market failure occurs when no markets exist to create a price for important social goods.
b. Free market exchanges can guarantee optimal results for addressing issues related to externalities.
c. The market-based approach always ensures that what is good and rational for a collection of individuals is also good and rational for a society.
d. Markets can be very successful if important ethical and policy questions and policy decisions are left solely to the outcome of individual decisions.
Q:
Which of the following explains the statement All resources are fungible?
a. It means that all resources can be regulated by the government.
b. It means that all resources can be replaced by substitutes.
d. It means that all resources cannot be recycled and reused.
Answer: b
Q:
In economic terms, all resources:
a. are infinite because they can be replaced by substitutes.
b. are distributed fairly by the government.
c. can be made available everywhere.
d. are distributed efficiently in the market.
Q:
Which of the following was suggested by William Baxter?
a. An optimal level of pollution can be achieved through competitive markets.
b. Society can strive for pure air and water at a very low cost.
c. From a strict market economic perspective, resources are infinite.
d. All resources can be replaced by substitutes.
Q:
Which of the following is involved in environmental problems according to the market-based approach to resolving environmental challenges?
a. Lack of knowledge of producing renewable resources
b. Inability of businesses to produce and sell limited resources
c. Lack of use of appropriate substitutes for limited resources
d. Allocation and distribution of limited resources