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Chapter 12 Corporate Governance and Business Ethics Answer Key
Multiple Choice Questions
1.
How did Uber conflict with Carnegie Mellon University's National Robotics Engineering
Center (NREC)?
2.
In late 2014, Uber senior executive Emil Michael was heard to say that Uber should spend
a million dollars to hire private investigators to dig up dirt on journalists who wrote
damaging pieces on Uber. When the remarks became public, he apologized. How did
Uber's CEO deal with Michael?
3.
Which of the following statements is true of shareholders in a public stock company?
4.
What does "limited liability for investors" imply in a public stock company?
5.
Jamiro Inc. is a public stock company. Which of the following statements about the
company best illustrates the fact that its investors have limited liability?
6.
Which of the following is a characteristic of a public stock company?
7.
Warren owns shares in a company called Gerarch Communications Inc. The company's
financial performance has been declining over the past few months, and the value of its
stock has been decreasing. Warren wants to proactively cut his losses and therefore sells
his shares. Lawrence, a trading enthusiast, buys shares in Gerarch Communications
because he believes that the share prices cannot go anywhere but up. Which of the
following characteristics of a public stock company does this scenario best exemplify?
8.
Hoptin Inc. is a public stock company. Which of the following best exemplifies the legal
personality of the company?
9.
What best describes transferability of investor ownership in a public stock company?
10.
Mario founded Tapoz Communications Inc. in 1993. Ten years later, the company went
public. Despite Mario's death in 2005, the company reported a 75 percent increase in
revenue in 2006. Which of the following characteristics of a publicly traded company does
this scenario best exemplify?
11.
Which of the following statements best supports the separation of ownership and control
in publicly traded companies?
12.
According to Michael Porter, which of the following is a problem with many publicly traded
companies?
13.
What is the result of managers' pursuit of strategies that define value creation too
narrowly in public stock companies?
14.
Vijay is a firm believer in Milton Friedman's view of a firm's social obligations. With which
of the following statements is Vijay most likely to agree?
15.
According to the perspective of shareholder capitalism,
16.
Leila is a graduate student pursuing a course in business. Presented with the case of
Uber's unethical behavior, Leila wonders if Uber's board of directors should ask the CEO
of Uber, Travis Kalanick, to step down. Having a strong belief in Michael Porter's idea of
value creation, Leila is most likely to conclude that
17.
Which of the following real-world events would act as the most likely deterrent against
adopting a purely stakeholder strategy approach to business?
18.
Creating economic value for shareholders while also creating social value is known as
creating
19.
Which of the following perspectives best supports the shared value creation framework?
20.
Which of the following statements best supports the view that GE's ecomagination
strategy is in line with the shared value creation framework?
21.
If the board of directors at GE decides to pursue a stakeholder strategy, should they
change the ecomagination strategy?
22.
Why does Michael Porter recommend expanding the customer base of an organization in
terms of the shared value creation framework?
23.
Grameen Bank in Bangladesh was founded to provide microcredit to impoverished farmers
who wanted to start their own entrepreneurial ventures that would help themselves climb
out of poverty. This best exemplifies Michael Porter's suggestion that
24.
_____ is a mechanism to direct and control an enterprise in order to ensure that it pursues
its strategic goals successfully and legally.
25.
Which of the following could most likely have prevented the accounting scandals of the
early 2000s and the global financial crisis?
26.
In public stock companies, which of the following expectations of principals is most likely
to lead to principal-agent problems?
27.
Which of the following is the source of the principal-agent problem in publicly traded
companies?
28.
Clare, the CEO of Femica Inc., reports to the board of directors appointed by the
shareholders of Femica. Based on shareholder suggestions, the board ties Clare's
compensation to the performance of Femica. Due to this pressure, Clare begins devoting
extra time to projects and undertakes other activities to ensure that she has job security
and that she receives adequate compensation. This conflict between Clare's interests and
the board's interests best illustrates a(n)
29.
The conflict in a principal-agent relationship arises when
30.
The informational advantage that agents possess over principals is often based on the fact
that
