Business Law Chapter 5

Ethics is as well defined as the law. T/F

Unless a corporation violates a law, its actions do not raise questions about the role of corporations and the effect of corporate ethics on profit. T/F

Originally, the only goal or duty of a corporation was to maximize profits. T/F

An overemphasis on long-run profit maximization is the most common reason that ethical problems occur in business. T/F

The study of business ethics is concerned with the purposes of a business and how that business achieves those purposes. T/F

An action may be legal but not ethical. T/F

Acting in good faith gives a business firm a better chance of defending its actions in court. T/F

Company codes are not law. T/F

Ethics is based more on research than judgment. T/F

Compared to business ethics, employee ethics is not an important issue. T/F

Religious rules generally are absolute with respect to the behavior of their adherents. T/F

Under the principle of rights theory, one person's principles are as "right" as another's. T/F

According to utilitarianism, it does not matter how many people suffer a negative effect from an act. T/F

The concept of corporate social responsibility is imposed on corporations by law. T/F

Corporations can demonstrate corporate social responsibility by promoting goals that society deems worthwhile. T/F

It is always clear what is ethical in a given situation. T/F

Managers must apply the same standards to themselves as they do to the company's employees. T/F

Companies are required to set up confidential systems so that employees and others can "raise red flags" about suspected illegal or unethical auditing and accounting practices. T/F

Given today's global communications network, most companies can assume that their actions in other nations will go unnoticed. T/F

Some provisions of U.S. bribery laws are directed toward accountants. T/F

In studying the business law, students also review ethics in a business context. Ethics includes the study of what constitutes a. right or wrong behavior. b. financially rewarding behavior. c. legal behavior. d. religious behavior.

Desdemona works for eInnovation, Inc. Her job includes putting "spin" on the firm's successes and failures. In this context, ethics has to do with how businesspersons, in making their decisions, apply a. legal doctrine. b. moral and ethical principles. c. corporate guidelines. d. financial priorities.

In making business decisions, Ridgeline Utility Service Company and other corporations should strive to be "good citizens" by evaluating a. the legal implications of each decision. b. the public relations impact. c. the safety risks for consumers and employees. d. all of the choices.

Green Hybrid Auto Corporation pays its executives an excessive amount relative to what lower-level employees at the company receive and to what executives at competitive companies are paid. Green Hybrid's pay scale is most likely to be challenged as a. illegal. b. unprofitable. c. unconscionable. d. unethical.

Corporate Security Company provides other firms with security services. Questions of what is ethical involve the extent to which Corporate Security has a. a legal duty beyond those duties mandated by ethics. b. an ethical duty beyond those duties mandated by law. c. any duty beyond those mandated by both ethics and the law. d. any duty when it is uncertain whether a legal duty exists.

Ronelle, the human resources director for Small Business Solutions, Inc., at-tempts to comply with the law in dealing with applicants and employ¬ees. One of the challenges Ronelle faces is that the legality of an action is a. always clear. b. never clear. c. only sometimes clear. d. usually clear.

Brewster, the chief executive officer of Cog & Gear Lubricants Corporation, wants to en¬sure that Cog & Gear's activities are legal and ethical. The best course for Brewster and Cog & Gear is to act a. in good faith. b. out of ignorance of the law. c. with regard for the firm's shareholders only. d. in their own self-interest.

Situations in which employers face ethical issues with respect to social media platforms include a. conducting an Internet search to discover what a job candidate has posted. b. judging a job candidate based on what he or she does outside the work environment. c. rejecting a job candidate if he or she does not participate in any social media. d. all of the choices.

Ryland, an officer for Sports Park, Inc., attempts to apply a duty-based approach to ethical reasoning in conflicts that occur on the job. This approach is based on the idea that a person must a. achieve the greatest good for the most people. b. avoid unethical behavior regardless of the consequences. c. conform to society's ethical standards. d. place his or her employer's interest first.

Dyan, the owner of Expert Restoration Services, Inc., adheres to the "principle of rights" theory. Under this theory, a key factor in determining whether a business decision is ethical is how that decision a. compares to religious principles. b. affects the rights of others. c. effects consequences that would follow if everyone in society acted the same way. d. supports the right to make a profit.

Steaks n' Fries Restaurant Company's decision makers view a particular risk in the consumption of Steaks n' Fries' products as open and obvious. Continuing to market the products without explicitly telling consumers of the risk could be justified from a perspective of a. duty-based ethics. b. corporate social responsibility. c. religious ethical principles. d. outcome-based ethics.

Ross, a research manager for Stock & Bond Investments, Inc., adheres to utilitarian ethics. Ross will determine that an action is morally cor¬rect when it produces the greatest good for a. Ross. b. Stock & Bond Investments. c. the fewest people. d. the most people.

Palette Paints, Inc. expends funds and takes steps to ensure that all employees are safe on the job, that all products are safe for consumers, and that the environmental impact of the corporation is minimal. Palette Paints appears to believe in the concept of a. the moral minimum. b. corporate social responsibility. c. "grey areas" in the law. d. government oversight.

Digital Analytics, Inc., considers the impact of its corporate decisions on various groups and often acts in the interest of a group that has a greater stake in a decision than Digital's shareholders. This approach is most likely to attract potential employees who are a. investors focused on short-term profits. b. older professionals. c. information technology specialists. d. recent college graduates.

Comfort Foods Corporation makes and markets its products nationwide. To be considered socially responsible when making a business decision, Comfort Foods must take into account the needs of a. its customers and the community only. b. its employees and owners only. c. its employees, owners, customers, creditors, suppliers, and the community. d. no one.

GetTogether, A Social Media Company encourages its managers to behave ethically, reasoning that lower-level employees will take their cues from management. One of the most important ways to create and maintain an ethical workplace is for GetTogether's management to a. demonstrate a commitment to ethical decision making. b. discreetly engage in unethical or illegal acts. c. look the other way when an employee engages in an unethical act. d. direct employees to "do as we say, not as we do."

Ricardo suspects his supervisor Simone of unethical accounting practices. But Ricardo does not want to report Simone if she will find out who reported her and fire Ricardo. An important feature of online reporting systems like EthicsPoint is that an employee reporting unethical behavior a. can do so anonymously. b. is financially compensated if he or she is fired as a result of a report. c. must fully identify themselves when making a report. d. must have additional employee support to make a report.

Lowell runs Medical Debt Collection Agency. He collects debts by misrepresenting the facts and pretending to be licensed to perform various occupations. Lowell's conduct most likely warrants a. an admonition for unethical behavior but no other sanctions. b. an injunction plus other sanctions. c. no sanctions but no praise. d. praise for the aggressive approach to collecting debts.

Discount Mart Corporation contracts with companies in developing nations to produce goods, because the wage rates in those nations are significantly lower than those in the United States. Discount Mart takes steps to avoid bad publicity by monitoring its suppliers' workplaces to make sure that the employees are not mistreated. Discount Mart is a. acting unethically in its pursuit of good publicity. b. acting unethically in its pursuit of profits. c. acting unethically by monitoring its suppliers. d. not acting unethically.

Petro Refining Corporation makes payments to potential customers, suppliers, and others with whom they might do business, including foreign private companies and the representatives of foreign labor organizations. If Petro knows that these payments will be passed on to a foreign government, this practice is a. illegal if the payments violate the Foreign Corrupt Practices Act. b. legal if a third party acts as a "go-between." c. legal if private parties are involved on both sides of the deal. d. legal if the payments are intended to facilitate business.