Ethics Final Study (Practice Questions)

Expert power usually stems from
a. a superior’s credibility with his or her subordinates.
b. the belief that a certain person has the right to exert influence and that certain others have
an obligation to accept it.
c. a person’s ability to influence the behavior of others by offering them something desirable.
d. a person’s ability to penalize the actions or behavior of another.
e. a person’s perceptions that his or her goals or objectives are similar to another’s.

a. a superior’s credibility with his or her subordinates.

Which of the following statements about power is true?
a. The five bases of power are mutually exclusive.
b. People generally use only one base of power to effect change in others.
c. Expert power exists when one person takes actions that will lead that person and others to
achieve their mutual objectives.
d. Power can be used to motivate individuals ethically or unethically.
e. The use of power is unethical.

d. Power can be used to motivate individuals ethically or unethically.

An organization that delegates decision-making authority as far down the chain of command as possible and has relatively few formal rules is
a. centralized.
b. decentralized.
c. scientific.
d. humanistic.
e. eclectic.

b. decentralized.

Under the Federal False Claims Act, a Qui tam relator is
a. someone who should be fired
b. an employee who has been accused of accepting a bribe
c. a whistle-blower who provides information to the government about a company’s
wrongdoing.
d. an employee who has behaved unethically.

c. a whistle-blower who provides information to the government about a company’s wrongdoing.

Although both structures can create opportunities for unethical conduct, which organizational structure tends to be more ethical?
a. Eclectic
b. Scientific
c. There is no difference.
d. Decentralized
e. Centralized

e. Centralized

The ability to influence the behavior of others by offering them something desirable is best described as
a. coercive power.
b. reward power.
c. expert power.
d. legitimate power.
e. referent power.

b. reward power.

An advantage of the decentralized organization is that
a. the focus is on formal rules, policies, and procedures backed up with elaborate control
systems.
b. there is a high level of bureaucracy.
c. each worker knows his or her job and what is specifically expected as well as how to carry
out designated tasks.
d. it is adaptable and can quickly respond to external change.
e. there is minimal upward communication.

d. it is adaptable and can quickly respond to external change.

Leaders who utilize reward power might reward other employees with
a. raises.
b. promotions.
c. status.
d. praise.
e. All of these would be considered rewards.

e. All of these would be considered rewards.

The apathetic organizational culture exhibits
a. high concern for people but minimal concern for performance.
b. little concern for people but a high concern for performance.
c. minimal concern for people and performance.
d. high concern for people and performance.
e. no concern for maintaining a cohesive organizational culture.

c. minimal concern for people and performance.

The exacting organizational culture is concerned with
a. performance but has little concern for employees.
b. investors’ impressions of profitability.
c. maintaining a strong corporate culture.
d. employees and performance.
e. employees’ impressions.

a. performance but has little concern for employees.

Corporate culture applies to
a. public corporations only.
b. private corporations only.
c. partnerships only.
d. all business organizations.
e. all organizations.

e. all organizations.

Which of the following statements about corporate culture is false?
a. Corporate culture refers to the patterns and rules that govern the behavior of an organization and its employees, particularly the shared values, beliefs, and customs.
b. The values and ethical beliefs that actually guide the firm’s employees are always the same ones that management states as defining the firm’s culture.
c. Corporate culture includes the behavioral patterns, concepts, values, ceremonies, and rituals that take place in an organization.
d. The culture of an organization may be explicitly stated or unspoken.
e. Failure to monitor or manage an organization’s culture may foster unethical behavior.

b. The values and ethical beliefs that actually guide the firm’s employees are always the same ones that management states as defining the firm’s culture.

Informal dress codes, working late, participation in extracurricular activities, gestures, and legends represent
a. an organization’s corporate culture.
b. codes of ethics.
c. a firm’s organizational chart.
d. formal expressions of an organization’s culture.
e. informal expressions of an organization’s culture.

e. informal expressions of an organization’s culture.

A cultural audit may be used to identify
a. how cultured a firm’s employees are.
b. unethical employees.
c. unethical organizations.
d. an organization’s culture.
e. organizational structure.

d. an organization’s culture.

Committees, formal groups of individuals assigned to a specific task,
a. always make the right decisions.
b. deal exclusively with ethics issues.
c. typically take longer to reach a decision than would an individual.
d. generally make more liberal decisions than those made by individuals.
e. do not bring more skills to solve a problem than does any one person.

c. typically take longer to reach a decision than would an individual.

Tiffany has been the top sales rep in her company for the past ten years. She has developed countless tricks and tips to continue to bring in customers. Tiffany would likely have ____ over a new sales rep.
a. coercive power
b. group power
c. Legitimate power
d. Expert Power

d. Expert Power

____ bring together the functional expertise of employees from several different areas of the organization on a single project.
a. Quality circles
b. Informal groups
c. Teams
d. Work groups
e. Committees

c. Teams

Individuals, often from the same department, who band together for purposes that may or may not be relevant to the organization are called
a. quality circles.
b. informal groups.
c. teams.
d. work groups.
e. committees.

b. informal groups.

Group norms
a. apply only to informal groups.
b. do not conflict with the values prescribed by the organization’s culture.
c. do not conflict with the organization’s rules and regulations.
d. are standards of behavior that groups expect of their members.
e. are the patterns and rules that govern the behavior of an organization and its employees,
particularly the shared values, beliefs, and customs.

d. are standards of behavior that groups expect of their members.

Which of the following statements about group norms is false?
a. Group norms define the limit on deviation from group expectations.
b. Group norms have the power to force a strong degree of conformity among group
members.
c. Management must carefully monitor the norms of all the various groups within the
organization, as well as the organization’s corporate culture.
d. Sanctions may be necessary to bring in line a group whose norms deviate sharply from the
overall culture.
e. Group norms never conflict with the overall organization’s culture.

e. Group norms never conflict with the overall organization’s culture.

Management’s sense of the organization’s culture
a. is the same as employees’ perceptions.
b. is easily adopted by employees.
c. is readily evident to employees.
d. may be quite different from employees’ perceptions.
e. is always different from employees’ perceptions.

d. may be quite different from employees’ perceptions.

According to the text, motivation is defined as
a. incentive or drive.
b. a force within the individual that focuses his or her behavior on achieving a goal.
c. personal ambition without regard to the impact on others.
d. a desire to achieve an end.
e. individual goals.

b. a force within the individual that focuses his or her behavior on achieving a goal.

When a foreman orders an assembly-line employee to carry out a particular task, even one that the employee perceives as unethical, the foreman is exercising
a. legitimate power.
b. expert power.
c. reward power.
d. contingent punishment power.
e. noncontingent reward behavior.

a. legitimate power.

To motivate employees, an organization offers ____ to ____ employees to work toward organizational objectives.
a. punishment, force
b. peer pressure, guilt
c. incentives, encourage
d. rewards, bribe

c. incentives, encourage

Which of the following combines high levels of concern for people and performance?
a. Apathetic culture
b. Caring culture
c. Integrative culture
d. Exacting culture
e. Cooperative culture

c. Integrative culture

Ethical concerns in centralized structures can occur because of very little
a. mobility.
b. upward communication.
c. scapegoating.
d. downward communication.
e. communication rigidity.

b. upward communication.

A high concern for people but minimal concern for performance can best describe the ____ culture.
a. caring
b. apathetic
c. exacting
d. shareholder
e. employee

a. caring

The establishment of an ethics committee within an organization
a. is usually highly informal.
b. is usually organized around general business topics.
c. can be misused if it is established for the purpose of legitimizing management’s standards
on a particular issue.
d. usually always succeeds.
e. usually increases ethical tension.

c. can be misused if it is established for the purpose of legitimizing management’s standards on a particular issue.

The "grapevine" within an organization is an important source of ethical information for
a. quality circles.
b. teams.
c. work groups.
d. committees.
e. informal groups.

e. informal groups.

____ are used to subdivide duties within functional areas of a company.
a. Work groups
b. Individuals
c. Experts
d. Consultants
e. Committees

a. Work groups

The ____ leader demands instantaneous obedience and focuses on punishing wrong behavior, achievement, initiative, and self-control.
a. democratic
b. coaching
c. affiliative
d. coercive
e. pacesetting

d. coercive

Bob inspires his employees to follow a vision, facilitates change, and creates a strongly positive climate, all while stressing performance. Bob has helped to create a(n) ____ culture.
a. authoritative
b. caring
c. integrative
d. exacting
e. affiliative

c. integrative

Ethical decisions within organizations are often made by
a. individuals.
b. laws.
c. peers.
d. committees and formal and informal groups.
e. ethics auditors.

d. committees and formal and informal groups.

In the past 50 years, scholars have developed at least 164 definitions of culture. According to the text, all have the following common elements:
a. Culture is shared, relatively stable, and is formed over a long period of time.
b. Culture is not shared, but stable, and is formed over a long period of time.
c. Culture is shared, but not stable, and is formed over a long period of time.
d. Culture is shared, stable, and covers and is formed very short period of time.
e. Culture is man- made, shared, not stable, and is formed over a short period of time.

a. Culture is shared, relatively stable, and is formed over a long period of time.

Because researchers have defined culture so many different ways, ____ and ____ are often used interchangeably.
a. cultural cues, management
b. cultural values, anthropology
c. cultural values, culture
d. cultural cues, laws
e. cultural cues, management

c. cultural values, culture

Explicit statements of values, beliefs and customs usually come from
a. lower management.
b. middle management.
c. independent auditors.
d. line supervisors.
e. top management.

e. top management.

A values-based ethics culture approach to ethical corporate cultures relies upon a(n) ____ that defines the firm as well as how customers and employees should be treated
a. set of laws
b. explicit mission statement
c. strong CEO
d. ethical audit
e. corporate culture that encourages ethical behavior

explicit mission statement

The idea that people learn ethical or unethical behavior while interacting with others who are a part of their role sets is referred to as
a. differential dissonance.
b. cognitive memory dissonance.
c. cognitive association.
d. differential association.
e. friendly association.

d. differential association.

The Sarbanes-Oxley Act has
a. only been established for firms over 50 employees.
b. institutionalized internal whistle-blowing.
c. power under the Securities and Exchange Commission
d. All of these statements are true.
e. None of these statements is true.

b. institutionalized internal whistle-blowing.

The ____ rule explains the percentage of employees in any given organization who will seek to do right versus how many will be indifferent.
a. 10-30-40-20
b. 20-30-30-20
c. 40-10-10-40
d. 10-40-40-10
e. 80-20

d. 10-40-40-10

T/F Decentralized organizations tend to put the blame for unethical behavior on lower-level personnel.

False (more likely to occur in centralized)

T/F Decentralized organizations give employees extensive decision-making autonomy.

True

T/F Corporate culture provides rules that govern behavior within the organization.

True

T/F An integrative culture shows high concern for performance and little concern for
people.

False (integrative shows high concern for performance and for people)

T/F Coercive power works in the same manner as reward power.

False

Fostering ethical decision making within an organization requires improving the firm’s ethical standards and
a. securing ethical suppliers.
b. conducting simulation exercises.
c. improving unethical persons.
d. terminating ethical persons.
e. terminating the ‘bad apples’ in the organization.

e. terminating the ‘bad apples’ in the organization.

Which of the following statements about codes of conduct is false?
a. They are formal statements of what an organization expects in the way of ethical behavior.
b. They guarantee an ethical business climate.
c. They help employees determine what behaviors are acceptable.
d. They provide rules and guidelines for employees to follow.
e. They should be specific enough to be reasonably capable of preventing misconduct.

b. They guarantee an ethical business climate.

According to the text, in the absence of ethics programs, employees are likely to make decisions based on
a. theirobservations of how their peers and superiors behave.
b. their observations of how their superiors behave.
c. their conscience.
d. their religious values
e. their family values.

a. theirobservations of how their peers and superiors behave.

A strong ethics program includes all of the following elements except
a. an ethics officer with a record of misconduct.
b. a written code of conduct or ethics.
c. formal ethics training.
d. rigorous auditing, monitoring, enforcement, and revision of program standards. e. an ethics officer to oversee the program.

a. an ethics officer with a record of misconduct.

____ are formal statements of what an organization expects in the way of ethical behavior.
a. Mission statements
b. Codes of conduct
c. Policies on confidentiality
d. Environmental policies
e. The Federal Sentencing Guidelines for Organizations

b. Codes of conduct

What is not a common mistake when designing and implementing an ethics program?
a. Failing to fully understand the goals of the program
b. Not setting realistic or measurable goals
c. Having top management take ownership of the ethics program
d. Developing materials that do not address the needs of the average employee
e. Transferring a program between countries and cultures without making adjustments

c. Having top management take ownership of the ethics program

A(n) ____ orientation creates order by requiring that employees identify with and commit to specific required conduct, whereas a(n) ____ orientation strives to develop shared standards.
a. obedience; values
b. compliance; values
c. legal; values
d. values; compliance
e. values; obedience

b. compliance; values

For an ethical compliance program to properly function
a. consistent enforcement and disciplinary action are necessary.
b. employees must be monitored using any means necessary.
c. it is not necessary to set measurable program objectives.
d. the same program should be used in all countries of operation, regardless of cultural
differences.
e. the company must wait an appropriate amount of time before investigating any suspected
misconduct.

a. consistent enforcement and disciplinary action are necessary.

Which of the following is the most comprehensive?
a. Code of values
b. Code of conduct
c. Code of ethics
d. Statement of values
e. Statement of principles

c. Code of ethics

At the heart of the Federal Sentencing Guidelines for Organizations is a
a. "tit-for-tat" philosophy.
b. Golden Rule philosophy.
c. Iron Rule philosophy.
d. carrot-and-stick philosophy that rewards efforts to improve ethics.
e. utilitarian philosophy.

d. carrot-and-stick philosophy that rewards efforts to improve ethics.

The Federal Sentencing Guidelines for Organizations require federal judges to increase fines for
organizations that continually
a. improve their ethics programs.
b. eliminate misconduct.
c. fail to install a Federal Sentencing Guidelines program.
d. fail to report ethics program activities.
e. tolerate misconduct.

e. tolerate misconduct.

Which of the following has increased the responsibilities on ethics officers and boards of directors to
monitor financial reporting?
a. Sarbanes-Oxley Act
b. Federal Sentencing Guidelines for Employees
c. Ethics Officer Responsibility Act
d. Sherman Antitrust Act
e. Enron Financial Responsibility Act

a. Sarbanes-Oxley Act

What is not a minimum requirement of an ethics and compliance program, according to the FSGO?
a. Standards and procedures that are capable of detecting misconduct.
b. High level personnel are responsible for an ethics and compliance program.
c. Standards and procedures are not communicated; employees are just expected to know.
d. Consistent enforcement of standards, codes and punishment.
e. Continuous improvement of the program.

c. Standards and procedures are not communicated; employees are just expected to know.

A legal test of a company’s ethical compliance program is possible when an
a. individual employee is charged with misconduct.
b. audit of the ethics compliance program occurs.
c. outside auditing of the ethics program occurs.
d. internal attorney’s risk assessment occurs.
e. outside attorney’s risk assessment occurs.

a. individual employee is charged with misconduct.

All of the following are useful in monitoring ethical conduct and measuring the effectiveness of the ethical program except
a. observation of employees.
b. internal audits.
c. firing.
d. surveys.
e. reporting systems.

c. firing.

A code of ethics that does not address specific high-risk activities within the scope of daily activities is
a. sufficient.
b. inadequate.
c. satisfactory.
d. acceptable as long as individual virtues prevent misconduct.
e. acceptable according to the Federal Sentencing Guidelines for Organizations.

b. inadequate.

Which of the following is not a responsibility of ethics officers?
a. Assessing the needs and risks that an ethics program must address.
b. Developing and distributing a code of conduct/ethics.
c. Ensuring the company is in compliance with government regulations.
d. Writing legislating pertaining to ethics.
e. Monitoring and auditing ethical conduct.

d. Writing legislating pertaining to ethics.

Ethical decision making is influenced by
a. coworkers.
b. the tone at the top.
c. corporate culture.
d. opportunities to engage in unethical behavior.
e. Ethical decision making is influenced by all of these.

e. Ethical decision making is influenced by all of these.

Which of the following is not a typical activity for an ethics officer?
a. Coordinating the U.S. Sentencing Commission annual ethics audit
b. Assessing needs and risks that the ethics program must address
c. Developing and distributing a code of ethics
d. Conducting ethics training programs
e. Monitoring and auditing ethical conduct

a. Coordinating the U.S. Sentencing Commission annual ethics audit

Which of the following is a common mistake made in implementing an ethics program?
a. Setting realistic and measurable program objectives
b. Developing materials that do not meet the needs of the average employee
c. Adapting a firm’s ethics program for its international operations
d. Allowing employees to practice the skills they learn in ethics training through case studies and/or group exercises
e. Management taking "ownership" of the ethics program

b. Developing materials that do not meet the needs of the average employee

NYNEX Corp. set up an ethics hotline and received over 2,700 calls in one year. Which component of the Federal Sentencing Guidelines for Organizations compliance program does this satisfy?
a. Code of conduct
b. Enforcement of standards, codes, and rules
c. Delegation of authority to ethical persons
d. Systems for monitoring, auditing, and reporting misconduct
e. Ethics training

d. Systems for monitoring, auditing, and reporting misconduct

Organizations can become "bad barrels" not because of unethical individuals but because
a. the pressures to succeed create opportunities that reward unethical decisions.
b. the pressures to succeed create opportunities that punish unethical decisions.
c. they lack leadership.
d. they lack values.
e. they lack apples.

a. the pressures to succeed create opportunities that reward unethical decisions.

Which of the following statements about training is false?
a. It can educate employees about the firm’s policies and expectations, as well as relevant
laws and regulations and general social standards.
b. It can dictate personal ethics on the job.
c. It can make employees aware of available resources, support systems, and designated
personnel who can assist them with ethical and legal advice.
d. It can empower employees to ask tough questions and make ethical decisions.
e. It can affect the influence of organizational culture, coworkers and superiors, and
opportunity.

b. It can dictate personal ethics on the job.

According to the text, a highly effective method of ethics training is
a. lectures.
b. videos.
c. religious training.
d. surveys.
e. exercise in resolving ethical dilemmas that relate to actual situations employees may face
on the job.

e. exercise in resolving ethical dilemmas that relate to actual situations employees may face on the job.

It is important for ethics programs to differentiate between organizational ethics and
a. the law.
b. societal ethics.
c. personal ethics.
d. supplier ethics.
e. Internet ethics.

c. personal ethics.

Which of the following is not a goal of an ethics training program?
a. To identify the contact person who could help in resolving ethical problems
b. To improve employee understanding of ethical issues and the ability to identify them
c. To control employees’ personal ethics and moral beliefs
d. To inform employees of related procedures and rules
e. To educate employees about formal ethical frameworks and models for analyzing business
ethics issues

c. To control employees’ personal ethics and moral beliefs

In the long-run, a(n) ____-based orientation may be better for companies, perhaps because it increases employees’ awareness of ethics issues at work.
a. code
b. obedience
c. compliance
d. values
e. None of these.

d. values

The individual responsible for implementing disciplinary action for violation of a firm’s ethics standards is usually the
a. CEO.
b. president.
c. immediate supervisor.
d. ethics officer.
e. Chairman of the board.

d. ethics officer.

To ensure that an ethics program addresses the needs of the average employee, it should include all of the following except
a. feedback from employees across the firm.
b. a question-and-answer section.
c. additional resources for guidance.
d. checklists, illustrations, and even cartoons where appropriate.
e. complex "legalese" wording.

e. complex "legalese" wording.

____ serve as a central contact point where critical comments, dilemmas, and advice can be assigned
to the person most appropriate for handling a specific case
a. Training programs
b. Mission statements
c. Codes of conduct
d. Hotlines
e. Boards of directors

d. Hotlines

An organizational ethics program should help reduce the possibility of penalties and
a. positive public reaction to misconduct.
b. negative public reaction to ethical conduct.
c. negative public reaction to misconduct.
d. positive public reaction to ethical conduct.
e. indifferent public reaction to conduct.

c. negative public reaction to misconduct.

Organizational probation, the ultimate "stick" associated with the FSGO, involves on-site observation
by consultants, monitoring of the company’s ethical compliance efforts, and
a. reporting to the Sentencing Commission on the company’s progress in avoiding
misconduct.
b. installation of an ethics hotline.
c. payment of any penalties levied.
d. appointment of an appropriate high-level manager to oversee the company’s program.
e. divestiture of all assets.

a. reporting to the Sentencing Commission on the company’s progress in avoiding misconduct.

Which of the following strives to create order by requiring that employees identify with and commit to specific required conduct?
a. Conduct orientation
b. Values orientation
c. Coercive orientation
d. Obedience orientation
e. Compliance orientation

e. Compliance orientation

Which of the following is not a common value that should be included in a code of ethics?
a. Fairness
b. Dishonesty
c. Responsibility
d. Respect
e. Trustworthiness

b. Dishonesty

With regard to ethics, training and communication initiatives should reflect
a. the organization’s management.
b. the organization’s culture.
c. the organization’s size.
d. the unique characteristics of an organization.
e. the organization’s accounting systems.

d. the unique characteristics of an organization.

T/F A compliance program should be deemed effective if it addresses the seven minimum requirements for ethical compliance programs

False An effective compliance program has the seven elements of a compliance program in place and goes beyond those minimum requirements to determine what will work in a particular organization

T/F The accountability and responsibility for appropriate business conduct rests with top management

True Executives in an organization determine the culture and initiatives that support ethical behavior

T/F Ethical compliance can be measured by observing employees as well as through investigating and reporting mechanisms

True Sometimes external monitoring is necessary, but internal monitoring and evaluation are the norm

T/F The key goal of ethics training is to help employees identify ethical issues

False No-it is much more than that – it involves not only recognition but also an understanding of the values, cultures and rules in an organization as well as the impact of ethical decisions on the company

T/F An ethical compliance audit is designed to determine the effectiveness of ethics initiatives

True It helps in establishing the code and in making program improvements

T/F Ethics audits are required by the Sarbanes-Oxley Act of 2002

False Financial audits are required, and these may address some ethical issues

T/F In public corporations, the results of ethics audits should be reported to the board of directors

True This is consistent with good corporate governance but not required

T/F An ethics audit helps identify risks and rogue employees

True – this is the main benefit of an ethics audit

T/F The scope of an ethics audit depends on the type of risks and the opportunities to manage them

True – the scope determines the risks unique to the organization

T/F Smaller companies can skip the step of verifying the results of the ethics audit

False – verification is necessary to maintain integrity and accuracy

Ethics auditing is similar to ____ auditing in that it employs the same procedures and processes to create a system of integrity that includes objective reporting.
a. social
b. regular
c. financial
d. citizenship
e. legal

c. financial

Which of the following statements about ethics audits is false?
a. They provide an opportunity to measure conformity to the firm’s desired ethical standards.
b. They are systematic evaluations of an organization’s ethics program and performance to
determine whether it is effective.
c. They provide an objective method for demonstrating a company’s commitment to
improving strategic planning, including its compliance with legal and ethical standards
and social responsibility.
d. They can be a component of a social audit.
e. They are the same thing as a social audit.

e. They are the same thing as a social audit.

A ____ is the process of assessing and reporting a business’ performance in fulfilling the economic, legal, and philanthropic responsibilities expected by its stakeholders.
a. performance audit
b. ethics audit
c. management audit
d. legal audit
e. social audit

e. social audit

A tool that companies can employ to identify and measure their ethical commitment to stakeholders. stakeholders is called a(n)
a. ethics audit.
b. social audit.
c. financial audit.
d. performance audit.
e. IRS audit.

a. ethics audit.

Which of the following is not a step in the ethics auditing process?
a. Secure commitment of top executives and directors
b. Review organizational mission, goals, values, and policies, and define ethical priorities
c. Verify the results
d. Collect and analyze relevant information
e. Report the results to the U.S. Sentencing Commission

e. Report the results to the U.S. Sentencing Commission

Which of the following is a statement that attests that the financial statements made in an audit are fairly stated, without limitations?
a. Adverse opinion
b. Qualified opinion
c. Unqualified opinion
d. Favorable opinion
e. Disclaimer of opinion

c. Unqualified opinion

Under the ____, CEOs and CFOs may be criminally prosecuted if they knowingly certify misleading financial statements.
a. Sherman Antitrust Act
b. Ethical Compliance Act
c. Robinson-Patman Act
d. Sarbanes-Oxley Act
e. Enron Ethics Reform Act

d. Sarbanes-Oxley Act

During which of the following steps of the ethics auditing process should stakeholders be defined and then interviewed, in order to integrate stakeholder feedback into the process?
a. Secure commitment of top managers and directors
b. Establish a committee to oversee the audit
c. Define the scope of the audit
d. Collect and analyze relevant information
e. Verify the results

d. Collect and analyze relevant information

Any attempt to verify outcomes and to compare them with standards can be considered a(n) ____ activity, although many smaller firms do not use this word.
a. ethical
b. auditing
c. formal
d. informal
e. accounting

b. auditing

____ are a primary stakeholder group, and should be included in the ethics auditing process, because their patronage and loyalty determines an organization’s success.
a. Customers
b. Employees
c. Special interest groups
d. Competitors
e. Legislators

a. Customers

The concept of ethics auditing emerged from the movement to audit and report on companies’ broader ____ initiatives.
a. initial public offering
b. legal compliance
c. product development
d. public relations
e. social responsibility

e. social responsibility

Which of the following is not an example of a problem that may arise from an ethics audit?
a. They can be expensive.
b. They can be time-consuming.
c. Employees may fear comprehensive evaluations.
d. They may reduce ethical compliance.
e. Selecting qualified auditors may be difficult.

d. They may reduce ethical compliance.

Which of the following is not a benefit of ethics auditing?
a. It can improve a firm’s performance and effectiveness.
b. It can increase its attractiveness to investors.
c. It can identify potential risks.
d. It can harm its relationships with stakeholders.
e. It can reduce the risks associated with misconduct.

d. It can harm its relationships with stakeholders.

The word ____ implies a balanced organization that makes ethical financial decisions and also is ethical in more subjective matters of corporate culture.
a. pride
b. integrity
c. financial management
d. corporate culture
e. transparency

b. integrity

Ideally, the ethics audit should be overseen by the
a. board of directors’ financial audit committee.
b. board of directors.
c. chief executive officer.
d. ethics officer.
e. outside consultant.

a. board of directors’ financial audit committee.

During which step of the auditing process should a firm examine all documents that make explicit commitments with regard to ethical, legal, or social responsibility?
a. Secure commitment of top managers and directors.
b. Establish a committee to oversee the audit.
c. Define the scope of the audit process.
d. Review organizational mission, goals, values, and policies.
e. Verify the results.

d. Review organizational mission, goals, values, and policies.

A ____ is a financial accounting firm that offers social auditing services or a nonprofit special interest group with auditing experience that verifies the results of ethics auditing data analysis
a. stakeholder
b. ethics audit consultant
c. best practices expert
d. financial consultant
e. board of directors

b. ethics audit consultant

The process of verifying the results of an audit should involve standard procedures that control the ____ of the information.
a. completeness
b. effectiveness and efficiency
c. reliability and validity
d. independence
e. veracity

c. reliability and validity

The ethics audit can pinpoint areas where improving operating practices can improve both bottom-line profits and
a. investor loyalty.
b. employee satisfaction.
c. customer satisfaction.
d. stakeholder relationships.
e. attitudes.

d. stakeholder relationships.

Two useful indicators for assessing employee issues are
a. turnover and stock price.
b. staff turnover and employee satisfaction.
c. staff turnover and honesty.
d. satisfaction and attendance.
e. satisfaction and productivity.

b. staff turnover and employee satisfaction.

When the Chris Hani Baragwanath Hospital in Johannesburg, South Africa, conducted focus groups with the hospital’s management, doctors, nurses, related health professionals, support staff, and patients, it was in which of the following stages of the ethics auditing process?
a. Collect and analyze relevant information.
b. Review organizational mission, goals, values, and policies.
c. Interview stakeholders.
d. Report the results.
e. Verify the results.

a. Collect and analyze relevant information.

While ideally the board of directors financial audit committee conducts ethics audits, in most firms they are conducted by
a. managers or ethics officers.
b. top executives or directors.
c. the chief executive officer.
d. an outside consultant.
e. stakeholders.

a. managers or ethics officers.

Because ethics and social audits are ____, there are few standards that a company can apply with regard to reporting frequency, disclosure requirements, and remedial actions that it should take in response to results.
a. not necessary
b. expensive
c. required by law
d. mandatory
e. voluntary

e. voluntary

To measure the effectiveness of its recently established ethics program, Spacely Sprockets, Inc., is conducting a systematic evaluation of its ethics program and performance. This is called a(n)
a. environmental-impact audit.
b. social audit.
c. ethics audit.
d. legal-compliance audit.
e. customer-satisfaction audit.

c. ethics audit.

What should be the first step in the auditing process?
a. Secure the commitment of top executives and directors.
b. Define the scope of the audit.
c. Establish a committee to oversee the audit.
d. Collect and analyze data.
e. Review organizational mission, goals, values, and policies.

a. Secure the commitment of top executives and directors.

Research suggests that publicity about unethical behavior can lower stock prices for at least ____ months.
a. six
b. three
c. twelve
d. nine
e. two

a. six

Which of the following is not a phase of escalation during an ethical disaster?
a. The firm’s discovery of the misconduct
b. Ethical issue recognition
c. The firm’s response to the misconduct
d. The decision to act
e. The firm’s decision to conduct an ethics audit

e. The firm’s decision to conduct an ethics audit

Which of the following is not a technique for collecting evidence during the ethics audit?
a. Ratio analysis
b. Observing the data-collection process
c. Publishing the results of the audit
d. Examining internal and external documents
e. Confirming information in the firm’s accounting records

c. Publishing the results of the audit

____ is an independent assessment of the quality, accuracy, and completeness of a company’s social or ethics report.
a. Publication
b. Verification
c. Auditing
d. Analysis
e. Validation

b. Verification

What should be the final step in the ethics auditing process?
a. Define the scope of the audit.
b. Secure the commitment of top managers and directors.
c. Collect and analyze data.
d. Report the findings.
e. Verify the results.

d. Report the findings.

Ethics audits can help companies identify potential ____ so they can implement plans to eliminate or reduce them before they reach crisis dimensions.
a. product flaws
b. risks and liabilities
c. productivity issues
d. computer glitches
e. market opportunities

b. risks and liabilities

During the data-collection phase of the audit, the primary objective is to generate a variety of opinions about how the company is perceived and whether it is
a. fulfilling quality promises.
b. bringing in new customers.
c. meeting profit projections.
d. meeting earnings projections.
e. fulfilling stakeholders’ expectations.

e. fulfilling stakeholders’ expectations.

Independent verification of the ethics audit is important because it lends the report
a. credibility and formality.
b. credibility and obsequiousness.
c. credibility and objectivity.
d. objectivity and civility.
e. objectivity and reliability.

c. credibility and objectivity.

When the Body Shop posts the results of its ethics audit on its web site, it is engaged in which of the following steps of the ethics auditing process?
a. Submit the results to the U.S. Sentencing Commission.
b. Define the scope of the audit.
c. Collect and analyze relevant information.
d. Verify the results.
e. Report the results.

e. Report the results.

While social reports often discuss issues related to a firm’s performance in the four dimensions of social responsibility as well as to specific social responsibility and ethical issues, ethics audits focus on more narrow issues related to assessing and reporting on a firm’s performance in terms of
a. ethical and legal conduct.
b. environmental performance.
c. financial performance.
d. customer satisfaction.
e. ethical misconduct.

a. ethical and legal conduct.

T/F Most countries have a strong orientation toward ethical and legal compliance

False

T/F The self-reference criterion is an unconscious reference to one’s own cultural values, experience, and knowledge

True, we react based on what we have experience over our lifetimes

T/F One of the critical ethical business issues linked to cultural differences is the question of whose values and ethical standards take precedence during interna- tional negotiations and business transactions.

True, Ethical standards and values differ from culture to culture, and this can be a critical point in effective business negotiations. Some people believe in cultural relativism, which means that the standards of the host country hold sway. However, many MNCs are legally bound to adhere to the standards of the host country.

T/F Multinational corporations have identifiable home countries but operate globally.

False, Multinational corporations have no significant ties to any nation or region.

T/F Certain facilitating payments are acceptable under the Foreign Corrupt Practices Act.

True, A violation of the FCPA occurs when the payments are excessive or are used to persuade the recipients to perform other than normal duties.

Business transactions across national boundaries are called
a. a multinational corporation.
b. culture.
c. business ethics.
d. global business.
e. national business.

d. global business.

Desirable ____, such as integrity, honesty and unselfishness are shared across most cultures.
a. country cultural values
b. amakudari
c. multinational corporations
d. global common values
e. products

a. country cultural values

The practice of ____ is common in the Japanese banking industry, in which businesspeople demonstrate trust by hiring retired Japanese bureaucrats to become auditors, directors, executives, and presidents.
a. trust
b. respect for one’s elders
c. poaching competitors’ employees
d. amakudari
e. secrecy

d. amakudari

____ assumes that humans may not act rationally because of genetics, learned behavior, and heuristics.
a. Rational economics
b. Culture
c. Multinational corporation
d. Country cultural values
e. Behavioral economics

e. Behavioral economics

Which of the following statements about multinational corporations (MNCs) is false?
a. MNCs are corporate organizations that operate on a global scale without significant ties to
any one nation or region.
b. MNCs are inherently unethical.
c. MNCs are characterized by a global strategy of focusing on opportunities throughout the
world.
d. Some MNCs are so large and powerful that their revenues are greater than the gross
domestic products of some countries.
e. Because of their size and power, MNCs have been the subject of much ethical criticism and the source of a number of ethical issues.

b. MNCs are inherently unethical.

Increasing the wealth gap between nations and misusing and misallocating scarce resources are ethical issues related to
a. cultural differences.
b. multinational corporations.
c. racial differences.
d. legal differences.
e. international negotiations.

b. multinational corporations.

Which of the following is not a criticism of or charge against multinational corporations (MNCs)?
a. They transfer jobs overseas, where wage rates are lower.
b. They increase the gap between rich and poor nations.
c. They pay high taxes everywhere.
d. They exploit the labor market of host countries.
e. They have an unfair advantage when competing with local businesses.

c. They pay high taxes everywhere.

Which of the following is a measure taken to curtail MNC practices that create ethical issues?
a. MNCs are trying to prevent the formation of labor unions.
b. MNCs are trying to halt the establishment of minimum wage laws.
c. MNCs are trying to avoid the United Nations’ efforts to monitor them.
d. Host governments have levied import taxes to lower the prices MNCs charge for their products.
e. Host governments have levied export taxes to force MNCs to share more of their profits.

e. Host governments have levied export taxes to force MNCs to share more of their profits.

____ occurs when the middle class shrinks, resulting in highly concentrated wealth amongst the rich,
and a large number of poor people with very few resources.
a. Communism
b. Socialism
c. Bimodal wealth distribution
d. A two-class social structure

c. Bimodal wealth distribution

An unconscious reference to one’s own cultural values, experiences, and knowledge is referred to as the
a. cultural reference criterion.
b. unconscious cultural criterion.
c. cultural-self criterion.
d. self-reference criterion.
e. unconscious cultural-self criterion.

d. self-reference criterion.

When in Rome, do as the Romans do, or you must adapt to the cultural practices of the country in which you are operating are rationalizations businesspeople sometimes offer for straying from their own ethical values when doing business abroad. This practice is called
a. self-reference criterion.
b. country cultural values.
c. global common values.
d. cultural relativism.
e. dumping.

d. cultural relativism.

____, which is related to behavioral economics, states that how information is presented to consumers will affect their choices.
a. A framing effect
b. Dumping
c. Bi-modal wealth distribution
d. Culture
e. Social democracy

a. A framing effect

What concept refers to economic theories advocating the creation of a society where wealth and power
are distributed evenly, relative to the amount of work expended in product?
a. Rational economics
b. Socialism
c. Capitalism
d. Rational capitalism
e. Facism

b. Socialism

Risk compartmentalization occurs when
a. companies separate their most problematic employees into separate profit centers so that
they cannot influence one another to act unethically.
b. all profit centers within a corporation are aware of the code of ethics.
c. all profit centers within an organization become aware of the consequences of competitors’
actions.
d. various profit centers within an organization become unaware of the consequences of their
actions on the firm as a whole.

d. various profit centers within an organization become unaware of the consequences of their actions on the firm as a whole.

____ has been codified in a United Nations document and is defined as an inherent dignity with equal
and inalienable rights as the foundation of freedom, justice, and peace in the world.
a. Cultural relativism
b. Human rights
c. Consumerism
d. Dumping
e. Health care

b. Human rights

Adam Smith encouraged ____, or the invisible hand, in which markets keep commerce in equilibrium.
a. laissex-faire economics
b. socialism
c. multinational corporations
d. stability
e. bribery

a. laissex-faire economics

During the 1930s, ____ argued that the state could stimulate economic growth and improve stability in the private sector.
a. Adam Smith
b. John Maynard Keynes
c. Milton Friedman
d. Herbert Hoover

b. John Maynard Keynes

The practice of charging high prices for products sold in home markets while selling the same products
in foreign markets at low prices, which do not cover all costs of exporting, is known as
a. price discrimination.
b. price gouging.
c. dumping.
d. skimming.
e. loading.

c. dumping.

____ assume(s) that a the market, through its own inherent mechanisms, will keep commerce in
equilibrium.
a. Amakudari
b. Laissez-faire
c. Economics
d. Multinational corporations
e. Socialism

b. Laissez-faire

Those who ascribe to consumerism
a. believe that consumers have the right to purchase anything they want.
b. do not believe in taxes on locally made products.
c. believe that consumers should own the means of production.
d. believe that consumers, not producers, should dictate the economic structure of a society.
e. believe government should run the economy.

d. believe that consumers, not producers, should dictate the economic structure of a society.

____ is based upon the assumption that people are predictable and will maximize the utility of their
choices relative to their needs and wants.
a. Rational economics
b. Socialism
c. Capitalism
d. Rational capitalism
e. Facism

a. Rational economics

____ allows for private ownership of property and also features a large government equipped to offer such services as education and health care to its citizens
a. Democracy
b. Communism
c. Socialism
d. Capitalism
e. Social democracy.

e. Social democracy.

____ states that the way something is presented to a consumer can affect the choices he or she makes.
a. Rational economics
b. Socialism
c. Capitalism
d. Rational capitalism
e. Behavioral economics

e. Behavioral economics

Culture is defined as
a. everything in our surroundings made by people.
b. tangible items.
c. intangible concepts.
d. intangible values.
e. All of these make up culture.

e. All of these make up culture.

The ____ formed in 1995 and administers its own trade agreements, facilitates future trade negotiations, settles trade disputes, and monitors the trade policies of member nations
a. International Monetary Fund
b. United Nations
c. World Trade Organization
d. North American Free Trade Act
e. European Union

c. World Trade Organization

Which of the following is not an issue raised by the debate over the pros and cons of capitalism?
a. Should governments be more protectionist in order to aid domestic industries?
b. Is western-style capitalism, with minimal government intervention, the best kind?
c. Is minimal government intervention best in terms of encouraging the free flow of goods
and services?
d. Does capitalism encourage the formation of cartels?
e. Do enough corporations take into account social responsibility?

d. Does capitalism encourage the formation of cartels?

Which of the following emerged from the Bretton Woods agreement of 1944, where a group of international leaders decided that the primary responsibility for the regulation of monetary relationships among national economies should rest in an extra-national body?
a. International Monetary Fund
b. United Nations
c. World Trade Organization
d. North American Free Trade Act
e. European Union

a. International Monetary Fund

These principles were developed by a reverend and the UN Secretary General. They express support for universal human rights.
a. The Global Sullivan Principles
b. Sarbanes-Oxley Act
c. FSGO
d. Global common values
e. Social democracy

a. The Global Sullivan Principles

What is the purpose of the UN Global Compact?
a. Support free trade unions
b. Abolish child labor
c. Protect the natural environment
d. To allow international corporations to indicate their commitment to social responsibility and ethics
e. All of these are purposes of the UN Global Compact.

e. All of these are purposes of the UN Global Compact.

Which of the following is not a step in forming an effective global code of conduct?
a. Set clear objectives.
b. Hold focus groups.
c. Translate the code.
d. Use the same code of conduct you would for a domestic firm.
e. Have knowledge about graphic design.

d. Use the same code of conduct you would for a domestic firm.

According to the text, as business facilitates exchanges, consumption will increase globally. The important issues related to consumerism include all but which of the following?
a. The impact of production on the environment.
b. The impact of differing forms of consumption on society
c. How much of what we deem necessary for consumption is influenced by corporations?
d. What are necessities and luxuries?
e. What is the impact of poor countries’ consumption patterns on wealthy countries?

e. What is the impact of poor countries’ consumption patterns on wealthy countries?

Which two developing countries are expected to generate ever-greater rates of consumption in the future?
a. U.S. and Russia
b. Russia and China
c. China and U.S.
d. Brazil and Russia
e. China and India

e. China and India

Human rights
a. are defined as an inherent dignity.
b. is not a new concept.
c. include inalienable rights like freedom and justice.
d. was not a consideration of firms several decades ago.
e. All of these statements are true.

e. All of these statements are true.

Which of the following is not an article in the UN Human Rights Declaration that was highlighted in
your text?
a. Freedom of religion
b. The right to work in favorable conditions
c. The right to electricity and running water
d. The right to a home adequate for health and well-being
e. Mothers and children being entitled to a special level of care

c. The right to electricity and running water

The growth of the Internet and differing laws between countries has led to an increase in concern for
the human right of
a. religion.
b. a secure job.
c. healthcare.
d. privacy.
e. freedom.

d. privacy.

Globally, one billion people lack access to ____
systems and approximately 11 million children under the age of 5 die from malnutrition and mostly preventable diseases each year.
a. community
b. education
c. healthcare
d. political

c. healthcare

According to the text, one of the most pressing international issues related to the UN Human Rights Declaration is
a. privacy and the Internet.
b. equal pay.
c. the hostile work environment.
d. sexual harassment.
e. maternal leave.

a. privacy and the Internet.

Benefits such as healthcare are being debated as to whether it is a right or privilege. Which of the
following countries does not consider health care to be a right?
a. The United States
b. China
c. Sweden d. Germany e. Canada

a. The United States

____ is an issue growing in urgency among lawmakers and businesses as the effects of climate change
grow more extreme.
a. Labor rights
b. Sustainable development
c. How to extract maximum resources
d. Education
e. Religious freedom

b. Sustainable development

The IMF
a. originated from the Bretton Woods agreement.
b. plunged Latin America into a decade of decline in the 1980s.
c. suggests that governments adopt a binding code of conduct across nations.
d. has the responsibility for the regulation of monetary relationships.
e. All of these statements are true.

e. All of these statements are true.

Which of the following has the power to enact legally binding ground rules for international commerce
and trade policy?
a. Caux Roundtable
b. World Trade Organization
c. Global Sullivan Organization
d. Federal Trade Commission
e. Global Commerce Association

b. World Trade Organization

T/F groups have been known to make riskier decision than an average individual member from the group would have made

True

T/F Listening involves paying attention to just verbal behavior

False, also nonverbal

T/F Ethical leadership is solely the concern of top management

False

T/F Ethical conflicts occur when there are two or more positions on a decision that conflict with organizational goals

True

T/F The four types of communication are interpersonal, small group, nonverbal, and listening

True

T/F Transactional leadership strives to raise employees’ level of commitment and to foster trust and motivation

False, transformational leaders

T/F Discovery in the RADAR model involves proactively trying to uncover ethical risk areas that could lead to misconduct

True, ethics audits are a good tool to use in the discovery process

T/F Sustainability is the potential for the long-term well-being of the natural environment, including all biological entities, as well as the mutually beneficial interactions among nature and individuals, organizations, and business strategies.

True

T/F The Environmental Protection Agency (EPA) deals with environmental issues and enforces environmental legislation in the United States.

True

T/F Ethanol, fracking, and hydropower are all forms of alternative energy.

False

T/F Greenwashing is a strategic process involving stakeholder assessment to create meaningful long-term relationships with customers, while maintaining, supporting, and enhancing the natural environment.

False green marketing

T/F Stakeholder assessment is an important part of a high-commitment approach to environmental issues.

True