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AACSB Standard: Social Impact
52. Managers can be tempted to present dishonest information to board members
because they are incentivized to provide information that ______.
a. makes them look good for promotion
b. makes board members happy
c. keeps board members from getting upset
d. honestly portrays company actions
53. Managers are often incentivized to appear ______ to the board rather than
appearing truthful.
a. loyal
b. ambitious
c. ethical
d. successful
54. When the CEO is also the chairman of the board, it is difficult to maintain ______.
a. customer loyalty
b. regulatory compliance
c. board independence
d. employee satisfaction
55. When a CEO places their friends on their company’s board, they can risk ______.
a. negligence
b. a lack of accountability
c. aversion to business risks
d. company morale
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56. Prior relationships between board members and the CEO can create what kind of
environment?
a. uncritical
b. observant
c. ethical
d. competitive
57. Major company failure is often the only way that a board can ______.
a. increase its market share
b. buy back public shares
c. reevaluate its code of ethics
d. remove CEO as board chair
58. When a board member works for a company that benefits from their membership on
another company’s board, they are engaged in a(n) ______.
a. mutual benefit agreement
b. conflict of interest
c. insider trading scheme
d. multi-level marketing initiative
59. A board member can commit a conflict of interest when they take what action?
a. become a shareholder for the company
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b. ask the board to disclose personal health information
c. use inside information to help their own company
d. sell their stocks when they know the company is about to receive favorable news
60. A board member can trade company stock only if stock information ______.
a. is kept confidential
b. was learned after they became a board member
c. is publicly known
d. has been vetted by the SEC
61. When a board member uses the information they know as a board member to buy
or sell stocks before it is publicly known, they are committing ______.
a. board bias
b. corporate espionage
c. conflicts of interest
d. insider trading
62. Insider trading is illegal because it provides board members with a(n) ______
regarding the selling and buying of stocks.
a. unfair advantage
b. lengthened timeline
c. reduced trading cost
d. separate exchange rate
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SAGE Publishing, 2021
AACSB Standard: Social Impact
63. You are helping determine who should be nominated for a board of directors. Your
priorities are to be sure each board member represents a variety of cultural
backgrounds, work experiences, socioeconomic statuses, and educational
backgrounds. This is an example of ______.
a. avoiding insider trading
b. ensuring board diversity
c. a conflict of interest
d. corporate espionage
64. A fuller range of knowledge and experience brought about through board diversity is
especially helpful for what action?
a. decision-making
b. hiring
c. reprioritization of resources
d. rebranding
65. Board diversity helps companies avoid board bias and ______ regarding a
company’s business plans.
a. customer loss
b. employee defection
c. uncritical governance
d. excessive overhead costs
66. Diverse boards are able to create an environment that is best suited for ______ and
addressing problems.
a. hiring quality employees
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b. maximizing profits
c. avoiding regulations
d. developing novel solutions
67. What action sets up future board members for success?
a. choosing popular figures who will draw attention to the company
b. choosing members that will avoid “entry shock”
c. choosing employees that meet board diversity needs
d. choosing well qualified members with diverse perspectives
68. You are the president of a board of directors that will soon have three vacancies that
need to be filled. In addition to making sure the new board members represent diverse
perspectives, you are also focused on finding members that have the requisite
experience needed to advise a business. This is an example of ensuring each board
member is ______.
a. loyal to the company
b. enthusiastic
c. popular enough
d. well-qualified
69. ______, qualification, and networking contributes to the gender gap in board
membership.
a. Gender discrimination
b. Lack of popularity
c. Poor recommendations
d. Lack of industry recognition
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AACSB Standard: Knowledge
70. Which is an example of how boards may unknowing discriminate against women on
the basis of networking?
a. A board holds open nomination and elections for all board vacancies.
b. A board meets certain diversity quotas to ensure diverse board membership.
c. A board recruits new members from the local business community.
d. A board relies on existing members to nominate, recruit, and select new board
members.
71. Which is one of the reasons for the gender gap in board membership?
a. Few businesses currently allow women in positions of leadership.
b. Boards of directors tend to prefer the business experience of men.
c. Business schools discriminate against women seeking MBAs.
d. Women have only recently begun to serve as corporate executives.
72. How did the #MeToo movement influence board membership?
a. It made vetting board members a high priority.
b. It led to many boards of directors to cease operations.
c. It put increased pressure to have a high number of women on boards of directors.
d. It led to a higher number of ethnically diverse board members.
73. The CEO of the Weinstein Company repeatedly sexually harassed and assaulted
hundreds of women over 30 years. When this information came to light and it was found
the board knew of this behavior, the company ______.
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a. fired the CEO
b. declared bankruptcy
c. attempted to gain B Corp certification
d. transformed the company into a non-profit
74. Nike’s informal sexual harassment survey findings resulted in ______.
a. 11 executives departing the company
b. no substantial change
c. a new women’s shoe line
d. more female spokespersons
75. Why are sexual harassment and assault allegations an issue for board members?
a. Because they are required to launch a full-scale legal investigation.
b. Because they have fiduciary duties to stakeholders.
c. Because they are responsible for vetting each employee.
d. Because they are responsible for overseeing company performance and reputation.
76. One of the best practices for a company to adopt when addressing sexual
harassment and assault is to hire ______.
a. a chief diversity and inclusion officer
b. fewer women
c. strong legal counsel
d. a female CEO
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77. What is a shareholder activist?
a. A political activist who owns shares in a company.
b. An advocate for shareholder rights.
c. A shareholder who uses their rights to bring about change.
d. A shareholder engaged in electoral politics.
78. The two types of shareholder activists are those who believe management is
performing poorly and wants it to change and those that want the company to ______.
a. diversify its board
b. improve its standards
c. get a new CEO
d. support more democratic candidates
79. Most shareholder activist campaigns in 2018 were targeted at businesses located in
______.
a. the USA
b. Canada
c. China
d. Cuba
80. Which is an example of a golden parachute?
a. An employee receives a new benefits package that includes a company car.
b. An employee receives a bump in pay and a job title change when promoted.
c. A CEO receives a large performance bonus when the company does well.
d. A CEO has a contract noting a six-figure payout if they are laid off.
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True/False
1. Corporate governance refers to how a company’s finances are kept in check.
2. With a limited liability company, the company itself assumes all business debts.
3. Shareholder primacy means that a corporation exists to bring value to all
stakeholders, not just profit stockholders.
4. The narrow conception of social responsibility argues that businesses must consider
both stakeholders and their larger community when developing business plans if they
seek to be ethical companies.
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5. The broad conception of social responsibility holds that the environment, the
community, employees, and other stakeholders must be taken into consideration when
making business decisions.
6. A business that operates for public benefit is known as a benefit corporation.
7. Certified B Corps receive a tax break due to their certification.
8. The Sarbanes-Oxley Act requires CEOs and CFOs to make their salaries public.
9. The governing board of a company should include members who are racially,
economically, and ideologically diverse as well those of diverse genders.
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10. Board members are often negligent due to ill-intentioned and unethical motivations.
Short Answer
1. Describe what fiduciary duty is and why it is important.
2. What is the difference between a sole proprietorship and a limited liability corporation
(LLC)?
3. What is the difference between tax evasion and tax avoidance?
4. What is distinctive about the governance structure of cooperatives?
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5. What is the advantage of receiving B Corp certification?
Essay
1. What are the advantages of shareholder-oriented corporate governance systems and
owner-oriented corporate governance systems?
2. Imagine you are a CEO of a company and are interested in making your company
more socially responsible. What argument should you make to the board in order to
achieve this goal?
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3. Why might a company decide to implement an employee shares opportunity program
(ESOP)?
4. Imagine that you are on a board of directors seeking to fill two vacant positions. What
argument should you make to support your goal of diversifying membership?
5. Why is choosing board members with a prior relationship to the CEO ethically
dubious?
Collins, Business Ethics 3e
SAGE Publishing, 2021