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Chapter 11 Evaluating Corporate Ethics 1. Which company is the focus of the opening scenario “But We Did Get the Red Eye Out”? a. Fuji b. Eastman Kodak c. Pentax d. Polaroid Answer: b. Eastman Kodak 2. What is the name of the online photo sharing Web site in “But We Did Get the Red Eye Out”? a. EasyView b. Easy File c. EasyShare d. EasyLink Answer: c. EasyShare 3. What was the manager ordered to do to the pictures on the web site? a. Edit out offensive images b. Delete photos when customers did not pay c. Compressing the pictures d. Release pictures to the authorities without consent Answer: c. Compressing the pictures 4. What happened after the manager complained to the company? a. The company corrected the problem. b. She was the only person laid off during a restructuring. c. She was fired immediately. d. She resigned. Answer: b. She was the only person laid off during a restructuring. 5. What percentage of firms in a survey done by PricewaterhouseCoopers had been a victim of economic crime from 2003 to 2005? a. 25 percent b. 30 percent c. 35 percent d. 45 percent Answer: d. 45 percent 6. Which size of firm had the highest percentage of fraud in the PricewaterhouseCoopers survey from 2003 to 2005? a. 1 to 200 employees b. 201 to 1,000 employees c. 1,001 to 5,000 employees d. more than 5,000 employees Answer: d. more than 5,000 employees 7. What was the fraud percent for companies that had up to 200 employees in the PricewaterhouseCoopers survey from 2003 to 2005? a. 36 percent b. 42 percent c. 48 percent d. 62 percent Answer: a. 36 percent 8. What was the fraud percent for companies that had over 5000 employees in the PricewaterhouseCoopers survey from 2003 to 2005? a. 36 percent b. 42 percent c. 48 percent d. 62 percent Answer: d. 62 percent 9. What was the average financial cost of firms in the PricewaterhouseCoopers survey from 2003 to 2005? a. $520,000 b. $895,000 c. $1.26 million d. $1.7 million Answer: d. $1.7 million 10. Which region had the highest percentage of companies that reported fraud in the PricewaterhouseCoopers survey in 2003? a. Central & Eastern Europe b. South & Central America c. Asia-Pacific d. Africa Answer: d. Africa 11. Which region had the highest percentage of companies that reported fraud in the PricewaterhouseCoopers survey in 2005? a. Central & Eastern Europe b. South & Central America c. Asia-Pacific d. Africa Answer: d. Africa 12. According to Table 11-2, which industry sector had the highest percentage of companies that reported fraud in the PricewaterhouseCoopers survey in 2005? a. Services b. Retail & Consumer c. Manufacturing d. Financial Services Answer: b. Retail & Consumer 13. Which type of fraud had the highest percentage for companies that reported fraud in the PricewaterhouseCoopers survey in 2003? a. Financial Misrepresentation b. Asset Misappropriation c. Corruption & Bribery d. False Pretences Answer: b. Asset Misappropriation 14. Which type of fraud had the highest percentage for companies that reported fraud in the PricewaterhouseCoopers survey in 2005? a. Financial Misrepresentation b. Asset Misappropriation c. Corruption & Bribery d. False Pretences Answer: b. Asset Misappropriation 15. Which of the following is not part of the common modus operandi of a typical fraud case? a. timing b. opportunity c. incentive d. rationalization Answer: a. timing 16. Which of the following is the most common way fraud is detected? a. internal controls b. informant c. by chance d. internal audits Answer: c. by chance 17. What type of ethics training program would focus on ensuring that the employees follow the rules, and explain what type of punishment would be implemented for employee misconduct? a. Control-oriented b. Compliance-oriented c. Values-oriented d. Monitor-oriented Answer: b. Compliance-oriented 18. What type of ethics training program would focus on the ethical aspirations of the employees as well as foster a forum to develop shared ethical values? a. Control-oriented b. Compliance-oriented c. Values-oriented d. Monitor-oriented Answer: c. Values-oriented 19. Based on the work of LeClair and Ferrell, which of the following is not one of the goals of an ethics training program? a. ensure the firm’s ethics values are integrated with the firm’s strategy b. enhance the employees’ knowledge of ethical issues c. develop skills to support a strong ethical climate d. ensures proper ethical decision making by the employees. Answer: a. ensure the firm’s ethics values are integrated with the firm’s strategy 20. In a recent study by the International Association of Business Communicators, which percentage of the respondents stated they had not received any formal ethics training? a. 25 percent b. 35 percent c. 45 percent d. 65 percent Answer: d. 65 percent 21. Which of the following is not a recommended key element by Jackson for a global ethics training program? a. Try to get beyond “rule formalism” b. Realize that the training programs needs to be changed annually c. Provide education on international human rights d. Present a rational dialogue for important international issues when there is dissent Answer: b. Realize that the training programs needs to be changed annually 22. Based on Table 11-4, which of the following is not a global cultural dimension? a. Individualism vs. Collectivism b. Capitalism vs. Socialism c. Masculinity vs. Femininity d. High Power Distance vs. Low Power Distance Answer: b. Capitalism vs. Socialism 23. What type of communication focuses primarily on the actual words spoken? a. High-Context b. Low-Context c. High-Literal d. Low-Literal Answer: b. Low-Context 24. What type of communication focuses on the actual words spoken and also nonverbal cues such as body language? a. High-Context b. Low-Context c. High-Literal d. Low-Literal Answer: a. High-Context 25. What type of culture is based on the view that the individuals do not want any ambiguity in their jobs? a. High uncertainty avoidance b. Low uncertainty avoidance c. Low risk taking d. Low ambiguity taking Answer: a. High uncertainty avoidance 26. What type of culture embraces risk and ambiguity? a. High uncertainty avoidance b. Low uncertainty avoidance c. High risk taking d. High ambiguity taking Answer: b. Low uncertainty avoidance 27. What type of culture focus on material goods, status, and accomplishment? a. free market b. capitalist c. masculine d. feminine Answer: c. masculine 28. What type of culture focus on human needs and supporting others? a. utilitarian b. socialist c. masculine d. feminine Answer: d. feminine 29. What type of culture embraces the hierarchical relationship that occurs between the manager and the subordinate? a. hierarchical b. bureaucratic c. high power distance d. low power distance Answer: c. high power distance 30. What type of culture embraces challenging the hierarchical relationship that occurs between the manager and the subordinate? a. chaotic b. quantum change c. high power distance d. low power distance Answer: d. low power distance 31. Which Congressional Act first encouraged firms to have a corporate ethics officer? a. The Corporate Ethics Act b. The Federal Sentencing Guidelines for Organizations Act c. The Sarbanes-Oxley Act d. The Federal Corporate Compliance Act Answer: b. The Federal Sentencing Guidelines for Organizations Act 32. Based on Figure 11-1, which of the following is not a role of an ethics officer? a. company security b. counselor c. whistleblower d. compliance officer Answer: c. whistleblower 33. Based on Figure 11-2, which of the following is not a role challenge of an ethics officer? a. Role responsibility b. Role conflict c. Role ambiguity d. Low Task visibility Answer: a. Role responsibility 34. Based on Figure 11-2, which of the following in not an individual factor needed by an ethics officer to be able to have an effective performance? a. Tolerance for ambiguity b. Tolerance for risk taking c. Locus of control d. Individual orientation and leadership behavior Answer: b. Tolerance for risk taking 35. Based on Figure 11-2, which of the following is not an organization context that can impact the effectiveness of an ethics officer’s performance? a. Resistance to change b. Managerial hierarchy c. Autonomy d. Recruitment Answer: a. Resistance to change 36. The regular comprehensive evaluation of the compliance of the firm’s ethical policies and procedures is called: a. ethics review b, ethical quality management c. ethical auditing d. ethical evaluation Answer: c. ethical auditing 37. Based on Table 11-6, what type of test asks the question “Does this decision prevent or limit the possibility of this issue arising again?” a. Repeating b. Continuous loop c. Preventative d. Post hoc Answer: c. Preventative 38. Based on Table 11-6, which type of test asks the question “Could we defend this decision if our actions became public knowledge?” a. sunshine b. exposure c. light of day d. enlightening Answer: c. light of day 39. Based on Table 11-6, which type of test asks the question “Who will be significantly impacted by this decision”? a. stakeholder b. utilitarian c. consequentialist d. universal Answer: c. consequentialist 40. What is the process in which an employee informs another responsible employee in the company about potentially unethical behavior? a. whistle-blowing b. purging and releasing Answer: a. whistle-blowing c. identification d, information transfer 41. Which of the following is not a type of hotline? a. In-house b. Outsourced c. Multiple d. Hybrid Answer: c. Multiple 42. In Table 11-13, how many of the top ten false claims act settlements are not related to health care issues? a. 0 b. 2 c. 3 d. 5 Answer: a. 0 43. In Table 11-13, what was the highest settlement amount in dollars? a. $650 million b. $700 million c. $800 million d. $900 million Answer: d. $900 million 44. In Table 11-13, which company had the highest settlement amount in dollars? a. Serono b. Taketa-Abbott c. Tenet Healthcare d. HCA Answer: c. Tenet Healthcare 45. In Table 11-13, what was the lowest settlement amount in dollars? a. $75 million b. $125 million c. $240 million d. $310 million Answer: d. $310 million 46. In Table 11-13, which company had the lowest settlement amount in dollars? a. HealthSouth b. Gambro Healthcare c. Abbot Labs d. HCA Answer: b. Gambro Healthcare 47. In Figure 11-3, which of the following is the first step in the framework of the evaluation of corporate ethics and stakeholders? a. Stakeholders b. Ethical monitoring mechanisms c. Strategic ethical formulation d. Strategic ethical implementation Answer: a. Stakeholders 48. In Figure 11-3, which step comes after “ethical monitoring mechanism” in the framework evaluation of corporate ethics and stakeholders? a. stakeholder b strategic ethical formulation c. strategic ethical implementation d. ethical performance Answer: d. ethical performance 49. In Figure 11-3, which step comes after “stakeholders” in the framework evaluation of corporate ethics and stakeholders? a. ethical monitoring mechanisms b. strategic ethical formulation c. strategic ethical implementation d. ethical performance Answer: b. strategic ethical formulation 50. In Figure 11-3, which step comes after “strategic ethical implementation” in the framework evaluation of corporate ethics and stakeholders? a. ethical monitoring mechanisms b strategic ethical formulation c. strategic ethical implementation d. ethical performance Answer: a. ethical monitoring mechanisms 51. Eastman Kodak is the company featured in “But We Did Get The Red Eye Out”. a. True b. False Answer: a. True 52. EasyView is the name of the Web-see featured in “But We Did Get The Red Eye Out”. a. True b. False Answer: b. False 53. The ethical issue of the “But We Did Get The Red Eye Out” relates to whistle-blowing. a. True b. False Answer: a. True 54. In a PricewaterhouseCoopers survey, firms that had between 201 and 1,000 employees had the highest incidences of fraud. a. True b. False Answer: b. False 55. In a PricewaterhouseCoopers survey, firms with over 5,000 employees had the lowest incidences of fraud. a. True b. False Answer: b. False 56. In the PricewaterhouseCoopers survey, the average financial cost of the fraud-related activities was $1.2 million. a. True b. False Answer: b. False 57. In the PricewaterhouseCoopers survey, South and Central America had the highest percentage of reported fraud worldwide. a. True b. False Answer: b. False 58. In the PricewaterhouseCoopers survey in 2003, Western Europe had the lowest percentage of reported fraud worldwide. a. True b. False Answer: a. True 59. In the PricewaterhouseCoopers survey, Asset Misappropriation had the highest percentage of type of fraud. a. True b. False Answer: a. True 60. In the PricewaterhouseCoopers survey, Insider Trading had the lowest percentage of type of fraud. a. True b. False Answer: a. True 61. In the PricewaterhouseCoopers survey, an internal audit had the highest percentage of detecting the fraud. a. True b. False Answer: b. False 62. The counter dimension to individualism is collectivism in global cultural dimensions a. True b. False Answer: a. True 63. The culture that focuses primarily on actual words spoken is called high-context communication. a. True b. False Answer: b. False 64. The culture based on the view that individuals do not want any ambiguity in their jobs is low uncertainty avoidance. a. True b. False Answer: b. False 65. The culture that focuses on material goods and status is masculine. a. True b. False Answer: a. True 66. The culture that embraces the hierarchical relationship that occurs between the manager and the subordinate is a low power distance culture. a. True b. False Answer: b. False 67. Counselor is a role of an ethics officer. a. True b. False Answer: a. True 68. Informant is a role of an ethics officer. a. True b. False Answer: b. False 69. Role conflict is a role challenge for an ethics officer a. True b. False Answer: a. True 70. Role rotation is a role challenge for an ethics officer. a. True b. False Answer: b. False 71. Ethical auditing is the regular comprehensive evaluation of the compliance of the firm’s ethical policies and procedures. a. True b. False Answer: a. True 72. Whistle-blowing is the process in which an employee informs another responsible employee in the company about potentially unethical behavior. a. True b. False Answer: a. True 73. Hybrid is a type of ethics hotline. a. True b. False Answer: a. True 74. One of the provisions in the Sarbanes-Oxley Act protects whistle-blowers. a. True b. False Answer: a. True 75. Stakeholders are the first step in Figure 11-3’s framework of the evaluation of corporate ethics and stakeholders. a. True b. False Answer: a. True 76. Based on the PricewaterhouseCoopers survey, how can so much fraud be committed if firms have the proper code of ethics and training programs? Answer: The simple answer is that fraud can always be committed by some individuals regardless of the safeguards. As was mentioned at the beginning of the textbook, as long as there are a finite amount of resources, there will always be people who will do unethical and illegal activities in order to obtain these resources. Having a comprehensive code of ethics and having a comprehensive ethics training program does not guaranteed that any given employees of any given time will be stopped from committing fraud. The key is to not only have a code of ethics and training program in place but firms also need constant monitoring and have a corporate culture that has zero tolerance for unethical activity. If employees see first hand the consequences of unethical activities, this may be enough of a deterrent for them to become involved in unethical activities. 77. Why doesn’t every firm have an ethics officer? Answer: The main reason is the financial cost of having an ethics officer. For many firms, they could not afford the salary of a full time ethics officer to help them with their ethical vision. However, many firms do not have an official ethics officer but a person can be assigned to be responsible for ethical issues as one component of their job description. If this is the case, the person usually is selected from either the human resources department or the legal department. 78. Explain the importance of the Framework presented in Figure 11-3. Answer: The framework of the evaluation of corporate ethics and stakeholders is critical to understanding the direct link between the ethics vision of the top management of the firm and the needs and expectations of the firm’s stakeholders. It is important to note that the starting point of the framework is the stakeholders. The underlying assumption is that in order to satisfy the needs and expectations of the stakeholder the top managers must understand what those needs and expectations are. Based on a summary of those needs, the firms can then develop an ethical strategic focus which is first formulation and then implemented. After the implementation stage has taken place, the firm must monitor the effectiveness of the ethical strategic vision. After the monitoring process has taken place, the firm can evaluate how effective they were by serving the needs of the stakeholders from an ethical perspective. Test Bank For Understanding Business Ethics Peter Allen Stanwick, Sarah D. Stanwick 9780131735422, 9788131755365, 9781506303239, 9781452256559
