Ethics Fundamentals | Business Ethics and Corporate Governance Quiz - 2

1. The stakeholders of an organization are all those who participate in some way in the activities of the organization. A company’s relationship with which of the following stakeholders must be based on mutual respect to foster long-term stability in return for value, quality, competitiveness and reliability?
[A]Creditors
[B]Suppliers
[C]Community
[D]Employees


2. The board of directors can exercise some powers on behalf of the company. Which of the following powers can be exercised only with the consent of the company at the general meeting?
I. The power to invest funds of the company.
II. Power to remit debt due by a director.
III. Power to appoint sole selling agents.
IV. Power to borrow in excess of capital and reserves for the company.
[A]Both (I) and (II) above
[B]Both (III) and (IV) above
[C](I), (III) and (IV) above
[D](II), (III) and (IV) above


3. Law can be defined as a consistent set of universal rules that are widely published, generally accepted and usually enforced. Which of the following is not true regarding the characteristics of law?
[A]Laws are enforced when people disobey them
[B]If a minority of members do not obey the law, it becomes difficult to enforce it
[C]The requirement how to act or not to act in a particular situation has to be published in written form
[D]Law is applicable to everyone who faces similar circumstances


4. Focus on corporate responsibility was highlighted through the industrial revolution and the years thereafter. Which of the following happenings pertain to the industrial revolution during ‘nonconformist challenge’ in Britain?
I. Wealth and industry were approached in different ways from the perspective of the religion that people heading big businesses followed.
II. Quakers played an important role in shaping values of new entrepreneurial groups.
III. It reflected the needs of people who failed to prosper from the industrial revolution.
[A]Only (I) above
[B]Only (II) above
[C]Both (I) and (II) above
[D]Both (II) and (III) above


5. A research was conducted by the Center for Advanced Purchasing Studies to find out the relationships of the American buyers with the foreign suppliers. Which of the following is not a result of this study?
[A]Buyers who were least satisfied with the supplier relationship were those who perceived their suppliers to be most involved in unethical activities
[B]Significant differences did exist between buyers’ and suppliers’ perceptions regarding how each believed the other to be involved in these activities
[C]Buyers believed that suppliers are involved in unethical practices and felt that suppliers are performing less effectively
[D]It appeared that American buyers realized that employing unethical practices will result in short-term success, but the foreign suppliers did not give hear to this aspect


6. Which of the following is/are not true regarding the study conducted to examine ethical practices in the US, France and Germany?
I. The American managers said that bribery was unethical and illegal under the Foreign Corrupt Practices Act.
II. Only one third of the French managers felt signing a purchase order with the cost price more than the current market price, would be dishonest.
III. It was concluded that the US and German executives were more concerned with ethical and legal questions.
[A]Only (I) above
[B]Only (III) above
[C]Both (I) and (II) above
[D]Both (II) and (III) above


7. At times of recession it has become common for businesses to reduce their size and overhead costs by discharging some of the employees, and creating which of the following styles of management?
[A]Autocratic
[B]Bureaucratic
[C]Lean and mean
[D]Hire and fire


8. Laws can be enforced only if they are unduly accepted. Which of the following is not a process involved in the formulation of law?
[A]Society process
[B]Political process
[C]Group process
[D]Economic process


9. Money laundering can be defined with reference to situations such as
I. Acquisition, ownership, possession or transfer of any proceeds of crime.
II. Knowingly entering into a transaction related to the proceeds of crime, directly or indirectly.
III. Concealment or aiding in the concealment of the proceeds of crime.
IV. Those that violate equality of opportunity.
[A]Both (I) and (II) above
[B]Both (III) and (IV) above
[C](I), (II) and (III) above
[D](II), (III) and (IV) above


10. Which of the following financial frauds can be detected by comparing financial statements over a period of time, examining unusual journal entries, verifying supporting sales documents and unusual sales transactions?
[A]Fraudulent asset evaluations
[B]Concealed liabilities and expenses
[C]Fictitious revenues
[D]Fraudulent timing differences


11. Which of the following is known as an assessment of the social impact of a corporation on society?
[A]Social audit
[B]Venture philanthropy
[C]Social initiative
[D]Ethical audit


12. The enlightenment matrix is used to measure corporate giving. As per the matrix, a company that is high in philanthropy and high in self-interest is involved in which of the following activities?
[A]Social responsibility
[B]Pure philanthropy
[C]Cause-related marketing
[D]Enlightened self-interest


13. Which of the following is the main purpose of corporate governance?
[A]Disbursement of organizational resources to individuals based on positive contributions made to the organization
[B]To adopt new technology
[C]To maximize shareholder value
[D]To separate ownership and management control of organizations


14. In which of the following corporate governance models, do financial institutions have a major say in governance mechanism?
[A]Anglo-American model
[B]German model
[C]Japanese model
[D]Indian model


15. Which of the following pertains to the ‘conformance role’ of a director?
[A]It is a tricky role as it involves the director monitoring and evaluating his own performance
[B]The director acting as a source of know-how expertise and external information
[C]Outside directors act as the eye of the board to the external world
[D]The outside directors representing the company on public forums or committees