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What was a reason for the city of Detroit's bankruptcy?
a. The disparity between the amount due in pension payments and the amount in the
fund and coming in
b. Payments for gun-related crimes
c. The GM pension plan
d. All of the above
The claims in the Skecher shoe ads:
a. Involved a breach of an express warranty.
b. Involved a breach of implied warranty of habitability.
c. Were not warranty claims.
d. Allowed only statutory remedies.
Who is Kenneth Branch?
a. An employee of NASA
b. An employee of Lockheed Martin
c. An employee of the defense department
d. An employee of McDonnell Douglas
"What were they smoking?", was a Fortune headline that referred to:
a. Bear Stearns.
b. Goldman.
c. J.P. Morgan Chase.
d. All of the above
Frank Hoffman is the CEO of Triple Plus, Inc., a group of four successful restaurants in
the Southwest. One member of the Triple Plus board of directors, Sam Wasson, has a
daughter, Chelsea Wasson, who has just started Chelsea's Cloths, a business that
supplies restaurant linens. Wasson has approached Hoffman to explain Chelsea's
business. Chelsea's Cloths has adopted an environmental emphasis in its operations as a
way of countering the industry trend toward the use of paper products in restaurants.
Sam Wasson initially recruited Hoffman as CEO, was instrumental in having the board
select Hoffman, and is one of Hoffman's strong backers. Wasson supported Hoffman
when other board members were impatient with his new procedures, policies, and
changes.
Ordinarily, when someone approaches Frank Hoffman with information on a new
supplier, he takes the information and refers it to the purchasing/supply area or refers
the person directly to the manager of purchasing. In this case, Frank personally
presented the information to Triple's purchasing manager, Deidre Hall. Frank offered
Deidre the Chelsea's Cloths brochure and card and explained, "She is Sam Wasson's
daughter. She just graduated in marketing from State University last June and now has
her own firm. See what you can do. Our contract with Lila's Linens is up for renewal.
Maybe we can do something."
Deidre evaluated Chelsea's and Lila's proposals as well as that of an additional firm in
making the purchasing decision. Although the pricing between Chelsea's and Lila's is
equivalent, Chelsea's is too young a firm to have a track record, and Deidre is not
convinced that Chelsea's can handle Triple's large account. Given Mr. Hoffman's
interest, however, Deidre is confused about what recommendation to make.
a. Should Deidre recommend Chelsea's firm or offer her true recommendation?
b. Would it be ethical for Hoffman to change Deidre's decision?
c. What if Wasson had requested bid information so that his daughter could be
competitive? Should Deidre supply it? Should Hoffman direct Deidre to supply it?
d. Can you solve the conflict without offending the director?
e. Does Hoffman need to be concerned about how his intervention would reflect the
"tone at the top"? Could employees misinterpret his actions?
Locke and Rawls develop their ethical theory on the basis of a tabula rasa.
Which of the following is an effective tool for preventing company/organization lapses?
a. Ethics training
b. Enforcement
c. Screening
d. Industry organizations
Who recruited whom in the Starwood and Hilton case study?
a. Hilton recruited a Starwood executive
b. Starwood recruited a Hilton executive
c. Hilton and Starwood were both trying to recruit an executive from another hotel
chain
d. Hilton and Starwood were both recruiting executives from each other
What motivated Sandy Weill's offer to do a favor for Jack Grubman?
a. He wanted to be on the board at WorldCom
b. He wanted Grubman to issue a positive report on WorldCom
c. He wanted to oust his co-CEO
d. He wanted to oust C. Michael Armstrong
What Enron accounting practice did Arthur Andersen label as medium to high risk?
a. SPEs
b. Mark-to-market accounting
c. Officers as principals of other firms doing business with Enron
d. a and c
e. a, b, and c
Which is not a physical technique for managing earnings?
a. Large-charge restructuring
b. Inventory write-down
c. Delayed invoices
d. All of the above are physical techniques for managing earnings
What company did Jack Grubman of Citi write a positive evaluation of in order to
obtain a favor from Sandy Weill?
a. Citi
b. WorldCom
c. Walmart
d. AT&T
What issue affected Grubman's relationship with Bernie Ebbers?
a. His desire to get his children into a preschool
b. IPO allocations
c. His negative analysis of WorldCom
d. None of the above
A predatory loan:
a. Is a loan that exceeds certain interest limitations or contains certain loan structures.
b. Is any subprime loan.
c. Can be affected by some state and local laws.
d. None of the above
In the Bausch & Lomb case, which of the following was not a technique of the sales
force used to meet their numbers?
a. Red ball day
b. Target numbers
c. Selling product in gray markets
d. All of the above were sales force tactics
Leslie Fay Companies was a clothing conglomerate that produced lines of women's
clothing and lingerie under the brand names Leslie Fay, Joan Leslie, Albert Nipon, Theo
Miles, Kasper, Le Suit, Nolan Miller, Castleberry, and Castlebrook. In early 1993, it
was discovered that senior Leslie Fay executives, in an effort to inflate profits and to
mask an actual loss of $13.7 million, had perpetrated an accounting fraud. Paul
Polishan, Leslie Fay's chief operating officer, was placed on leave without pay in
January 1993, along with Donald F. Kenia, the corporate controller. Mr. Kenia had first
alerted the company to the accounting manipulations and worked with auditors to
untangle the books.
By April 1993, Leslie Fay, under intense pressure from creditors, filed for Chapter 11
bankruptcy (reorganization) in Manhattan. Both Mr. Polishan and Mr. Kenia were fired.
Mr. Kenia, charged with two counts of filing false statements with the SEC, has entered
into a plea bargain with the U.S. Attorney in exchange for his cooperation in the
continuing investigation of the Leslie Fay accounting improprieties.
Also in April 1993, two new outside directors were named to the Leslie Fay board. The
audit committee of the board discovered, through continuing investigation, that
accounting irregularities had inflated the company's profits for at least five quarters
beginning in the fall of 1990.
As Leslie Fay continued its climb from bankruptcy, it was discovered that its law firm,
Weil Gotshall & Manges, had failed to disclose its close ties to two board audit
committee members. A federal bankruptcy judge ordered the law firm to pay fines
totaling $800,000, which was the cost of having an independent review of the law firm's
representation and conduct in the case.
In March 1995, Leslie Fay placed its flagship dress and retail business up for sale and
offered its CEO a success fee of $1.5 million if those businesses were sold.
Also in March 1995, a report detailing accounting improprieties was released by the
audit committee of the Leslie Fay board. The board found that when executives realized
they would not meet pre-established goals, they would ship goods out to a
Wilkes-Barre, Pennsylvania, facility to inflate sales. The executives also forged
inventory tags, multiplied the value of inventory, developed phantom inventory and
altered records to meet sales target. Some goods were invoiced to be shipped in the final
day of a quarter even though they were not actually shipped until the next quarter.
Numerous shareholders have filed suit against the Leslie Fay board and BDO Seidman,
the company's auditor during this period.
John Pomerantz continued as CEO from 1993 onward. The company has tried to find a
buyer but has remained unsuccessful in doing so.
a. What signals about the importance of earnings at Leslie Fay were sent to the officers
who committed the accounting improprieties?
b. Wouldn"t employees have been aware of the financial fraud? Why didn"t they speak
up? Why didn"t they tell someone?
c. How might Leslie Fay have prevented what happened?
d. If you were the new chief financial officer, what message would you most want to
impress upon all Leslie Fay employees?
e. Of what significance are the law firm's ties to the board's audit committee members?
Did these ties set a poor tone at the top?
The criminal charges involving Peanut Corporation of America relating to Salmonella:
a. Involve both insiders and an outside food broker.
b. Are likely to be dismissed because of lack of proof.
c. Involve criminal fraud.
d. Both a and c
What was the total cost if Intel replaced all chips?
a. $100 million
b. $200 million
c. $260 million
d. $360 million
Adam Smith fits into which category?
a. Utiliarian
b. Divine Command
c. Ethical Egoism
d. Categorical Imperative
Who else did David Duncan consult about the off-the-book entities?
a. Sherron Watkins
b. His wife
c. His pastor
d. Both b and c
e. All of the above
With respect to #85, what is Senator Specter concerned about?
a. The slippery slope
b. That the NFL is unregulated
c. That there is no need for concern
d. That no crime was committed
Who wrote the "Johnny Appleseed" letter to the FDA?
a. Charles Jones
b. John Lavery
c. Jerome LiCari
d. Nils Hoyvald
When was the intermittent windshield wiper first installed in cars?
a. 1969
b. 1970
c. 1971
d. None of the above
In the NASA Challenger case, what company built the rocket boosters?
a. NASA
b. Morton Thiokol
c. Lockheed Martin
d. Boeing
How did Siemens accomplish its long history of paying bribes to government officials
in exchange for obtaining contracts from those governments?
a. It used business consulting arrangements in all of the countries
b. Siemens was not involved in any bribery activities but it was found to have been
involved in useful expenditures
c. Siemens is not subject to the FCPA because it is a German company
d. Siemens used NGOs to funnel the money into the various countries
How did the problems between Hilton and Starwood employee recruitment and use of
records come to light?
a. The arbitration hearing on poaching resulted in confessions
b. The arbitration hearing on poaching resulted in the exchange of documents
c. The arbitration hearing caused other employees to come forward with information
d. None of the above
As the regulatory cycle progresses:
a. Options increase and cost decreases.
b. Options decrease and cost decreases.
c. Options decrease and cost increases.
d. Options increase and cost increases.
Who said a corporation has no conscience?
a. The chairman of General Motors
b. Jeff Dachis of Razorfish
c. Bill Gates
d. Sir Alfred Coke
Which of the following is not a step in analyzing ethical dilemmas and case studies?
a. Make sure you have all the facts available
b. List the concerns of each person involved in the dilemma
c. Develop a list of potential resolutions
d. All of the above are steps
Which of the following models includes the question of legality of conduct as part of
the ethical analysis?
a. Blanchard and Peale
b. Laura Nash
c. Peter Drucker
d. None of the above
Who recorded phone conversations with Scrushy in order to document numbers
manipulation?
a. Leslie Scrushy
b. William Owens
c. Diana Henze
d. None of the above
The American Board of Internal Medicine (ABIM) has taken some sort of disciplinary
action against 140 docs who cheated on their ABIM certification exams. In a lawsuit
that the ABIM had filed previously against Arora Board Review, a company that does
exam review courses for certification, the discovery process yielded information that
proved to be more damaging for the docs than for Arora. The documents in the
now-settled case included e-mails and other correspondence from the docs to Arora.
The e-mails and correspondence revealed that the docs knew many of the questions
and, indeed, followed up by sending along memorized test questions from their own
certification exams to Arora in order to help the cert-docs-in-waiting along.
List the stakeholders in this situation.
What issue did the federal auditor raise about Stanford's research overhead expenses?
a. That the paperwork was not complete
b. That there are no overhead reimbursement for grants
c. That the overhead expenses submitted did not seem right
d. That the overhead expenses violated the rules
Ralph has used all but one day of his personal leave time (PLT). His company's policy
is that PLT can be used for illness, family needs, or medical appointments. Ralph has
used his PLT days when he was hung over or when a friend wanted to spend the day
with him. Ralph's grandmother, to whom he is very close, passed away, and he would
like to go to her funeral, but it will take a day of travel, a day for the funeral, and a day
to return. Ralph has asked his supervisor for additional time off in order to go to the
funeral. Which of the following is correct?
a. If Ralph were an employer, he would see his request differently.
b. Companies need to provide additional days when employees request them for a good
reason.
c. Ralph should receive the extra days because everybody uses PLT for sketchy reasons.
d. Giving Ralph the extra days does not affect other employees.
What changes did Jack-in-the-Box make after the E-Coli poisonings?
a. Changed meat suppliers
b. Increased cooking temperature
c. Added extra meat inspections
d. a and b only
e. a, b, and c
Under Sarbanes-Oxley, audit committees of publicly held companies' boards need not
be made up of independent members so long as the majority of the board is
independent.
Malden Mills employees continued to work for Malden and Feuerstein without any
problems after Feuerstein paid them whilst the factory was being rebuilt.
Make a list of the factors common to the cultures of Enron, WorldCom and Tyco.
With respect to #85, it would be unethical for you to hire your friend to get him to bring
the information to your company.
List those affected when employees cheat on their travel expenses.
Herman Miller follows a policy of compliance with existing environmental laws.
Most employees believe that their performance evaluations are accurate.
Robert Halfon sees activist movements as a threat to corporate property rights.
Paul Babcock gave the following advice to Standard Oil Company executives who were
going to testify before Congress about the business practices of Standard Oil, "Parry
every question with answers which, while perfectly truthful, are evasive of bottom
facts." Apply ethical analysis to the advice and the statement.
Galleon Hedge Fund was involved in insider trading.
Ethical lapses involve gradual decision processes.
Enron used "mark to market" accounting.
Slotting is the collection of fees by grocery retailers from wholesalers and
manufacturers.
In the "Parable of the Sadhu," the hikers don"t know why the Sadhu is on the mountain.
Discuss the following statement:
"There's a difference between being very competitive and can-do, and winning at all
costs. All costs is costly."
