Quiz

LGST 39459

Page Count
19 pages
Word Count
4997 words
Book Title
Business Ethics: Case Studies and Selected Readings 8th Edition
Authors
Marianne M. Jennings
Warren Buffett is the CEO of:
a. Home Depot.
b. Berkshire Hathaway.
c. Southwest Airlines.
d. None of the above
Provide the accounting for the following:
a. EBITDA is no income
b. GAAP is no income
c. EBITDA is $4,000,000
d. None of the above
Which philosopher feels that we all hold a set of rights and that it is the role of
government to protect those rights?
a. John Stuart Mill
b. Robert Nozick
c. John Locke
d. Adam Smith
Who is Randi W.?
a. Assistant principal at a middle school
b. Principal at a middle school
c. Student who was molested by an assistant principal
d. None of the above
The MERS system:
a. Allows for anyone to sign a deed and have it be valid.
b. Is the same as the public land recording system.
c. Allows for fictitious signatures for mortgage foreclosure.
d. None of the above
Fannie Mae's policies on amortization:
a. Met accounting standards.
b. Were developed by the CFO and controller.
c. Were adjusted for arbitrary volatility.
d. All of the above
What type of letter of recommendation did Gadams's receive from his first employer?
a. The employer disclosed that Gadams had molested children
b. The employer gave a glowing recommendation of Gadams and his ability
c. The employer refused to give any information except to disclose that Gaddams had
worked there
d. None of the above
Lee Iacocca, chairman and CEO of Chrysler Corporation, announced on January 27,
1988, that the automaker would be closing its Kenosha, Wisconsin, plant. Iacocca and
his board of directors were under significant pressure from shareholders due to
Chrysler's continuing poor financial performance. Chrysler had acquired the Kenosha
plant when it purchased American Motors Corporation in 1987. In his announcement,
Iacocca blamed national trade policy for Chrysler's declining sales and resultant
earnings problems.
At the Kenosha plant, which manufactured the Dodge Omni and the Plymouth Horizon,
5,500 of the 6,500 workers were to be laid off and production moved to a Detroit plant.
Kenosha, a city of 77,000 on the shores of Lake Michigan, depended heavily on
Chrysler's presence.
The announcement of the closing came at a critical time. Chrysler was negotiating to
renew its contract with the United Auto Workers (UAW). Also, the Kenosha plant
carried a history of union financial assistance. The UAW had loaned American Motors
over $60 million to keep the Kenosha plant running, and Chrysler had assumed the loan
obligations as part of the acquisition. Also, Wisconsin had paid $5 million for job
training at the Kenosha plant in 1987 after Chrysler promised that the plant would build
Omnis and Horizons for at least five more years.
Peter Pfaff, a member of the UAW Local 72 of Kenosha and an employee at the plant
since 1972, said: "I was there. We"ve got it on tape and in writing. They said they"d
stay. Greenwald (then Chrysler Motors chairman) keeps saying Chrysler never said that,
but I was there when he said it."
The Kenosha local threatened to delay negotiations on renewing the national contract
with 64,000 workers. After the threat, Iacocca announced that Chrysler would establish
a $20 million trust fund to aid the 5,500 Kenosha workers through housing payments
and educational funding. This fund would be in addition to severance pay, extended
unemployment benefits, and repayment of the UAW loans. While denying that Chrysler
was setting a precedent, Iacocca declared it had a "moral obligation" to Kenosha.
Wisconsin threatened to sue Chrysler over the job training program but agreed to hold
off in exchange for Iacocca's promise to extend production at the plant for several
months into the fall of 1988.
Iacocca stated that Chrysler was "guilty as hell of being cockeyed optimists. Blame us
for being dumb managers, for spending $200 million to put two old cars (the Chrysler
Fifth Avenue and the Dodge Diplomat) in an eighty-six-year-old plant, but please don"t
call me a liar when I"ve got to close it sooner than I thought." Iacocca sought
congressional support for converting the Kenosha plant to defense work by Chrysler.
Chrysler and the UAW negotiated a contract that provided additional unemployment
benefits for the 5,500 laid-off workers and more job security for the 1,000 workers who
would transfer to other Chrysler operations. Ultimately, the plant closing resulted in
3,700 layoffs.
By mid-1990, Kenosha was enjoying unprecedented economic growth. At a July 1990
ceremony in which engineers detonated explosives to destroy the 250-foot-high
smokestack of the Chrysler plant, dignitaries and former workers cheered. Kenosha
resident T. R. Garcia said at the blasting, "I think it's about time they got rid of it. What
we need to do is develop the lake front, and this thing is the last to leave." City planner
Ray Forgianni, Jr., added, "The community's image is probably the best it's been in 100
years. The closing was almost like a catalyst. The handwriting was on the wall-the
economy needed to diversify."
a. Did Chrysler have a moral obligation to the Kenosha workers and Wisconsin, or was
it just responding to pressure?
b. Do arrangements like Chrysler had with the UAW loans and Wisconsin interfere with
the ability to make business decisions? Review Iacocca's quote on business mistakes as
you evaluate the issue.
c. Were the shareholders required to pay twice for the closing " once in severance pay
and again in extended benefits?
d. Was Chrysler simply putting its duty to shareholders above its duty to Wisconsin,
Kenosha, and its workers? Is this proper? Is it ethical?
e. Was Chrysler's action just a catalyst for needed economic development?
f. Iacocca, after having stepped down as chairman of Chrysler, made a takeover offer
for Chrysler in 1995. What would Chrysler's ethical culture be like if Mr. Iacocca had
succeeded in his takeover bid?
What happened when Smith & Wesson broke rank and decided to settle the gun
litigation?
a. It was touted as a good company and its earnings went up
b. It lost its customer base
c. It slowed down the gun regulatory cycle
d. It was able to sell more guns at higher prices
Why does a company act voluntarily in implementing procedures and equipment
beyond the statutory requirements?
a. To avoid criminal penalties if there is ever a misstep
b. For purposes of good relations with regulators and community
c. To maximize shareholder value over the long term
d. Both b and c
e. a, b and c
Albertson's, the grocery retailer, has the highest profit margins in the industry at 6%. A
union has filed suit against Albertson's for its "off-the-clock" without pay practices with
respect to manager trainees. These trainees worked 4-5 hours extra each week without
pay and did not complain because of promises of progression in the organization. When
progression did not materialize, the trainees returned to checking positions and their
union filed a class action suit on their behalf. The potential for back pay and penalties in
the case is $200 million.
Albertson's notes that some managers may prod trainees to work longer without pay but
that such is not company policy.
a. Who is responsible for the "off-the-clock" policy?
b. Is it each store manager or Albertson's?
c. Is "off-the-clock" an ethical policy?
Which of the following was not a description of Ann Hopkins that appeared in the
comments from the partners at Price Waterhouse?
a. "Macho"
b. "Outstanding professional"
c. "Extremely competent, intelligent"
d. All of the above were comments made by the partners
What is managerial ambivalence?
a. When a manager is confused about ethics
b. When a manager sends inconsistent signals on ethics
c. A manager who does not believe in incentive plans for meeting numbers
d. A manager who does not see the bottom line as most important
What temperature was Jack-in-the-Box cooking its burgers at when the E-Coli illnesses
and deaths occurred?
a. 140 degrees
b. 150 degrees
c. 155 degrees
d. 160 degrees
e. 165 degrees
What percentage of total record sales is rap music?
a. 10%
b. 20%
c. 30%
d. 18%
Jack Grubman, a financial analyst, committed which ethical breach(es) in order to earn
a slot for his children in a preschool?
a. Allowing a false impression
b. Conflicts of interest
c. Taking unfair advantage
d. All of the above
Albertson's, the grocery retailer, has the highest profit margins in the industry at 6%. A
union has filed suit against Albertson's for its "off-the-clock" without pay practices with
respect to manager trainees. These trainees worked 4-5 hours extra each week without
pay and did not complain because of promises of progression in the organization. When
progression did not materialize, the trainees returned to checking positions and their
union filed a class action suit on their behalf. The potential for back pay and penalties in
the case is $200 million.
Albertson's notes that some managers may prod trainees to work longer without pay but
that such is not company policy.
a. Who is responsible for the "off-the-clock" policy?
b. Is it each store manager or Albertson's?
c. Is "off-the-clock" an ethical policy?
Suppose, with reference to #12 above, that Pickford already owns an interest in the
biotech firm, but Munford Stanley is not the underwriter. Pickford:
a. Does not have a conflict of interest.
b. Has a conflict of interest, but it is acceptable in IPOs.
c. Has a conflict of interest that must be disclosed to all purchasers.
d. Does not have a conflict of interest, but Munford Stanley does.
e. None of the above
Primum non nocere is associated as an ethical philosophy of:
a. Plato.
b. Aristotle.
c. Peter Drucker.
d. Laura Nash.
Which of the following is not a conflict of interest?
a. A HealthSouth director with a $250,000 per year consulting contract with
HealthSouth
b. A HealthSouth director with a joint investment with Richard Scrushy
c. A HealthSouth director who is also a physician
d. A HealthSouth director who receives a $425,000 donation from HealthSouth to the
charity whose board he serves on
Who received the longest sentence in prison for their crimes?
a. Andrew Fastow
b. Jeffrey Skilling
c. John Rigas
d. Bernie Ebbers
In 1991, James McElveen fell 30 feet from a waterfall and broke his back. He was
employed by a small business and had no medical insurance. His lifetime friend, Benny
Milligan, was with him when the fall occurred. Benny took James to the emergency
room. Moved by his friend's severe injuries and pain and suffering and realizing that
James did not have insurance, Benny switched IDs with James in the hospital
emergency room. James required surgery to fuse his back to avoid what doctors said
would have been certain paralysis. The cost of the surgery and hospitalization was
$41,107.45. Neither James, employed as a mechanic, nor Benny, employed as a painter,
could have paid for the surgery and follow-up care. Benny's employer's insurance paid
for the surgery because the hospital took the information from Benny's ID found in
James' pockets.
While Benny was contemplating telling his employer, someone notified the insurance
company of the switch. Benny, James, and Benny's wife, Tammy Milligan were charged
and convicted of mail fraud, wire fraud and conspiracy. Tammy, because of the
Milligans' three young daughters, is serving her sentence through home confinement,
Benny is serving 9 months and James is serving 7 months. All three were serve three
years on probation and pay restitution.
Benny states, "I know what I did was wrong. But I look back on it, and I feel that I had
to do it at the time. I don't feel like I'm a criminal in the sense of rapers, muggers and
murderers." Benny said he did not understand that a hospital has an obligation to treat
someone who is dying. Friends testified that as they were racing James to the hospital
they told Benny that hospitals in the area had routinely refused to provide medical
treatment.
Benny said he wanted to tell his employer, but he was afraid he would be fired and then
be stuck with the bill. Tammy adds that the government is right to demand restitution
but wrong to imprison them. James asked the judge if he could go to prison for all three
of them, "I would be lost without my friendship with Benny. I probably would be dead."
a. Benny and James committed an illegal act. Was it unethical?
b. What punishment is appropriate in the case?
c. If you were Benny's employer, what would you have done?
List the six steps you should follow for analyzing an ethical dilemma.
What happened to the prosecutors in the Stevens case?
a. They were cleared of any misconduct
b. They were disbarred
c. One committed suicide
d. None of the above
Which of the following are used to smooth out earnings?
a. Cookie jar reserves
b. Expectations gap
c. Spring-loading
d. All of the above
Which of the following would be a breach of trust and ethics?
a. Sharing a new product idea with a prospective employer
b. Leaving your current employment for a higher paying job
c. Leaving your current employment for a job with more flexibility
d. Taking the skills you have learned at a current job to a new job
e. All of the above are breaches of trust and ethics
Which was not a business pressure Beech-Nut was feeling at the time of the juice
controversy?
a. Heavy debt
b. 15% market share
c. Old plant in need of maintenance
d. Beech-Nut had all of the above threats
You are at lunch when you notice one of your firm's delivery drivers sitting at the bar in
the restaurant. The driver is having shots of tequila over the course of the lunch hour.
He then returns to his truck in the parking lot and resumes deliveries. You:
a. Should stop the driver.
b. Should report the driver.
c. Should take the keys to the truck.
d. Should do all of the above.
Timothy Mayopoulos was not fired by Bank of America.
An application for graduate school admission at Arizona State University includes the
following request for information:
Please list all institutions attended since graduation from high school.
Marie Davis, a returning student, is applying for admissions to the Masters in
Architecture program. Marie attended the University of Arizona for one semester in
1976. Marie had a substance abuse problem and did not attend many of her classes. She
left the University of Arizona before classes ended that semester. She did not take her
final exams and earned 15 credit hours of "E" for that semester. After 8 years, the policy
of the University of Arizona is to expunge the records of non-matriculating students.
Marie's record was expunged in December 1994.
a. Marie need not disclose her attendance at the University of Arizona.
b. Marie should disclose her attendance at the University of Arizona.
c. Since Marie did not matriculate according to the University, she did not attend the
University of Arizona.
d. None of the above
What is Mr. Rajaratnam, the former head of Galleon Hedge fund, accused of doing?
a. Advance trading on IPOs
b. Trading on inside information
c. Honest services fraud
d. Fraud in financial reports
Which of the following is a continuing form of tobacco regulation?
a. No-smoking ordinances
b. Requirements that tobacco companies launch "don"t smoke" campaigns directed at
teens
c. Prohibitions on tobacco company funding for lung cancer research
d. All of the above
How much of Andersen's Enron revenues came from auditing fees?
a. $27 million
b. $25 million
c. $52 million
d. None of the above
James Dodgsen is a student in a graduate course in business. The professor in the course
has given Dodgsen and his classmates a surprise quiz in class. Dodgsen did not do the
reading for class that day because he had been grading papers as part of his TA position.
He has been prepared for every other class that semester. As he glances as the quiz
questions, he realizes that he does not know any of the answers. However, he sees that
Jane Frampton, the student who sits next to him, is well prepared and answering the
questions with great ease. He can see her answers because of her large, block-style
printing. Dodgsen copies her answers.
a. Dodgsen is justified in using the answers because he the pop quiz was unfair.
b. Dodgsen is justified in using the answers because he was fulfilling his TA
responsibilities instead of preparing for class.
c. Dodgsen is justified in using the answers if he intends to read the material eventually.
d. Dodgsen has been dishonest.
e. None of the above
Where did Ms. Druyun first cross an ethical line in her relationship with Boeing?
a. When she mentioned she was retiring
b. When her daughter was hired at Boeing
c. When her daughter mentioned to Mr. Sears that her mother was retiring
d. None of the above
FINOVA eventually declared bankruptcy.
Only one Siemens employee was involved in paying bribes.
Stanford University medical researchers conducted a study on the correlation between
the use of fertility drugs and ovarian cancer. Their study, published in the American
Journal of Epidemiology, concludes that the use of the fertility drugs, Pergonal and
Serophene, may increase the risk of ovarian cancer by three times. The lead author of
the studies, Professor Alice Whittemore, stated, "Our finding in regard to fertility drugs
is by no means certain. It is based on very small numbers and is really very tenuous."
FDA Commissioner David Kessler would like the infertility drug manufacturers to
disclose the study findings and offer a warning on the drug packages. He notes, "Even
though the epidemiology study is still preliminary, women have a right to know what is
known. We're not looking to make more of this than there is."
If you were a manufacturer of one of the drugs, would you voluntarily disclose the
study information?
It would not be unethical for you to accept two employment offers in case one fell
through.
The FDA declined to regulate General Mills and Cheerios ads.
Dennis Kozlowski's first trial resulted in a hung jury.
Some countries make it a crime to buy and use a knock-off product.
FASB 125 has been eliminated because of Enron and its SPEs.
You work for a construction firm that is submitting a bid for the construction of a new
company headquarters building for Smithco. A friend you have known since high
school works in Smithco's capital budgeting area and has full knowledge of all the bids
from all firms. It would be unethical for your friend to share that information with you
before you submitted your bid.
The Golden Rule is a form of the Categorical Imperative.
Nick Leeson did not serve time in prison for his activities at Barings Bank.
Refer back to Unit Four and discuss why Tylenol (McNeil) behaved so differently in the
quality control situation as opposed to the poisoning situation.
Gray market goods are not a form of infringement.
List and briefly describe the schools of ethical thought.
You work for a construction firm that is submitting a bid for the construction of a new
company headquarters building for Smithco. A friend you have known since high
school works in Smithco's capital budgeting area and has full knowledge of all the bids
from all firms. It would be unethical for your friend to share that information with you
before you submitted your bid.
Options can be priced at the time of the grant at whatever price the board establishes.

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