Deck 13: Whos Minding the Store?: The Ethics of Corporate Governance

Question 1

Who should rule the corporation? Explain your answer with reference to three of the thinkers presented here.

Answer 1

No Answer

Question 2

Argue that corporations should have less governance. Now find four problems with your argument.

Answer 2

No Answer

Question 3

Why might a stockholder want a board of directors to "go easy" on a CEO? How can a board of directors curtail a CEO's actions? How can a board of directors encourage a CEO to be ethical?

Answer 3

No Answer

Question 4

How much say-so should employees have over the decisions of the corporations for which they work? Explain your response.

Question 5

What are good reasons to eliminate CEOs from corporations altogether? List four or five. Now list five reasons that show a corporation could not succeed without a CEO. Which list is more compelling, and why?

Question 6

Why do CEOs so often fall into moral error? Use some insights from both this chapter and Chapter 12 to develop your answer.

Question 7

If a corporation were like a government, what sort of government would it be? A democracy? An aristocracy? A constitutional monarchy? A dictatorship? Argue for an analogy and explain your answer.

Question 8

What groups, norms, institutions and practices are necessary to promote good corporate governance? What changes must be made in China in particular to offset the past decade's concerns about corporate governance in Chinese corporations?

Question 9

Sam Walton used to say that Wal-Mart was like "a family." Can a corporation be run like a family? How would that work? What moral problems might it solve? What new problems would be created?

Question 10

Research the origins of the corporation and show how corporate structure evolved to become what it is today. Can some of today's problems be anticipated, and perhaps even solved, by looking at the history of the corporation? Explain.

Question 11

Research Tyco and Dennis Koslowski. What could the board of directors have done differently? What were the warning signs? When and how could Koslowski and Tyco have been "turned around" by the board? Or should Koslowski simply have been fired at some point? If so, when?

Question 12

Nader, Green, and Seligman argue that mismanagement of a corporation often occurs because of a failure to:

A) Be accountable to shareholders
B) Account for market factors
C) Anticipate technological changes
D) Restrain the power of senior executives
E) Be competitive economically

Question 13

Nader, Green, and Seligman argue that the board should actively review important executive business proposals to determine their full compliance with:

A) The law
B) Corporate policy
C) Employee wishes
D) Shareholder profits
E) The company code of ethics

Question 14

In his advice to auditors, Warren Buffett asks whether the auditor would have received the information essential to understanding the company's financial performance during the reporting period if he were an:

A) Employee
B) Accountant
C) Investor
D) Auditor
E) Attorney

Question 15

The only member of a corporation charged with the task of managing the CEO is who?

A) The CFO
B) The COO
C) The administrative assistant
D) The corporate director
E) The stockbroker

Question 16

The board of directors is historically supposed to do what?

A) Report to the public
B) Establish procedures to help monitoring
C) Approve or veto important executive management decisions
D) Hire and fire CEOs
E) All of the above

Question 17

A federal chartering law would ideally do what, according to the view of Nader, Green, and Seligman?

A) Reform the corporation so that the board must fulfill specified duties
B) Give CEOs more power
C) Give employees more power
D) Reform the manner in which CEOs are chosen by the board
E) Specify how it is that the CEO should "behave"

Question 18

There are how many types of decisions in which Nader, Green, and Seligman believe a board needs to exceed its limited review role?

A) None
B) One
C) Two
D) Three
E) Seven

Question 19

To do its job properly, the board needs what, according to Nader, Green, and Seligman?

A) A full staff of employees
B) Permission to talk to executives about personal matters
C) More time to contemplate decisions
D) Access to recent and germane corporate data
E) All of the above

Question 20

An effective board will reduce what when it is working correctly?

A) Company profits
B) Cohesiveness among the executives of the corporation
C) Employee wages
D) Labor costs
E) All of the above

Question 21

Shapiro points out that there are critics of corporate structure who:

A) Believe that corporations need a complete structural "overhaul" to become accountable
B) Believe that employees need to take a more proactive role in assessing the needs of customers
C) Believe that customers should have a "say" in corporate decisions
D) All of the above
E) None of the above

Question 22

Shapiro notes that the modern corporation is expected to do what?

A) Help relieve poverty in its native country
B) Do more than just make products
C) Help relieve poverty throughout the world
D) Behave just like a government
E) Only be in existence for a short period of time

Question 23

Shapiro's overall point is that:

A) Corporate structure needs a drastic overhaul.
B) Corporate governance is worse than it has ever been.
C) Corporations are more accountable than in the past, so no changes are needed.
D) Corporations are more accountable than in the past, but more improvement is still needed.
E) CEO should hand over most of their power to a board of directors.

Question 24

The evidence of objective industrial studies seems to show that:

A) Competition is declining as corporations become larger.
B) Employees work harder for environmentally aware companies.
C) The number of corporations is on the rise.
D) Public opinion is that corporations are still struggling.
E) None of the above

Question 25

To nationalize the corporation is one way in which some critics would like to see corporations:

A) Reformed
B) Brought to an end
C) Restored to their former position
D) Made accountable to employees
E) Made accountable to customers

Question 26

After Enron and Worldcom, America is __________ corporations.

A) less worried about
B) less fearful about
C) less trusting of
D) more hopeful about
E) less skeptical of

Question 27

What is/are the sign(s) of CEO disengagement as outlined by Reisner?

A) Posture
B) An attitude of defeat
C) Lack of visibility
D) All of the above
E) None of the above

Question 28

Positive signs that a CEO is engaged in a company's difficulties include:

A) Accepting blame, apologizing
B) Being visible and talking to people
C) Being sensitive and lacking confidence
D) Both (a) and (b)
E) All of (a), (b), and (c)

Question 29

The monotonic view emphasizes maximization of __________ wealth.

A) the public's
B) government's
C) shareholders'
D) the CEO's
E) None of the above

Question 30

Dunfee talks about marketplace morality, by which he means:

A) The duty of corporations to obey the law
B) Moral beliefs of corporate executives
C) Moral beliefs and desires that influence economic behavior
D) Moral duties of corporations toward shareholders
E) Moral duties of corporations to give to charity

Question 31

According to Dunfee, surveys of senior managers found that:

A) Most of them were ethical.
B) Most of them claimed to be ethical but were not.
C) Most did not care about morality.
D) Most supported a monotonic approach.
E) Most supported a pluralist approach.

Question 32

Dunfee thinks that businesses should respect consumers' moral beliefs and desires. Why?

A) Because businesses should respect the ethics of the communities in which they operate.
B) Because consumers are better judges of right and wrong than are businesses.
C) Because failing to respect consumers' ethics can damage a business in the long run.
D) Both (a) and (b)
E) Both (a) and (c)

Question 33

Dunfee's first principle for managers says that there is a presumption that corporate actions should be undertaken to:

A) Satisfy the needs of all stakeholders
B) Balance the needs of all stakeholders as much as possible
C) Create the greatest good
D) Maximize shareholder wealth
E) Both (b) and (d)

Question 34

What is a "hypernorm," according to Dunfee?

A) A universal principle used to judge lesser moral principles
B) A moral principle that is overly rigid, self-righteous, and moralistic
C) A principle used to justify actions that are really motivated by profit
D) A local moral principle that may not be universally accepted
E) A principle emerging from marketplace morality

Question 35

McCall notes that most approaches to morality that stress individual rights have adherents who believe what?

A) That rights are the only important thing needed to assess questions of ethics
B) That traditional values supersede new values
C) That individual persons are valuable
D) That rights are valuable
E) None of the above

Question 36

McCall points out that some objections to more democratic worker participation in the corporate structure arise because of what?

A) Complaining CEOs
B) New employees
C) Old board members
D) Worries of lost vacation
E) Concerns of efficiency

Question 37

An increase in self-respect and a decrease in stress can both be results of greater:

A) Responsibility
B) Wages
C) Autonomy
D) Achievements
E) Security

Question 38

McCall notes that some people argue that allowing employee participation in corporate governance would violate:

A) Federal law
B) Owners' property rights
C) Local ordinances
D) Moral law
E) Tradition

Question 39

When two people's rights come into conflict, and both rights rest on the same moral values, how does McCall think we should decide the priority?

A) For which one is the value more centrally at stake?
B) Which person is the neediest?
C) Which person is the most powerful?
D) Which person is acting with autonomy and fairness?
E) Democracy: we should vote.

Question 40

According to Eric Jackson, companies with proper corporate governance

A) have transparency.
B) have accountability.
C) have visionary CEOs.
D) a. and b.
E) a., b. and c.

Question 41

Jackson warns that if confidence in Chinese corporate governance falls, investors may one day consider investing in Chinese stocks to be just as risky as investing in countries like

A) Colombia
B) Russia
C) Iraq
D) Germany
E) Scotland

Question 42

What advice did the business school students give to the CEO of Birkenstock?

A) Stop giving to charitable causes.
B) Give more to charitable causes.
C) Give to causes more related to shoes.
D) Lay off some workers to cut costs.
E) Both (c) and (d)

Question 43

Nader and his co-authors support the idea that each member of a board of directors should have a specific constituency, like employee welfare or consumer protection.

Question 44

CEOs are under constant scrutiny by board members.

Question 45

It is generally argued here that there are too few checks and balances in a corporation.

Question 46

One way that critics propose to reform corporate structure is to make it communistic in character.

Question 47

The board of directors should be the ones to hold executive management accountable.

Question 48

Ideally, a task of the board of directors would be to report all executive decisions to the public.

Question 49

Some corporate critics believe that the way to reform corporations is by changing the election procedures of the board members.

Question 50

Shapiro believes that market competition is highly overestimated when assessing the implications of larger and larger corporations.

Question 51

Shapiro points out that to be effective, directors need to be disinterested in their jobs.

Question 52

Sometimes CEOs want large compensation packages not out of greed, but in order to feel appreciated, engaged, and successful.

Question 53

The pluralist view holds that corporations should not aim to make a profit.

Question 54

Moral beliefs and desires don't affect people's economic behavior in the market.

Question 55

McCall believes that giving the employees of corporations participation rights is a viable road to effective corporate restructuring.

Question 56

Most senior managers believe that business should always act to maximize profit for the shareholders.

Question 57

Employee self-worth is a benefit of a more democratically controlled corporation.

Question 58

One of Kant's principles is to treat humanity as an end in itself, not merely as a means.

Question 59

Shapiro believes that a board of directors should establish standards for judging the management.

Question 60

Accepting blame is a sign that a CEO is losing confidence or disengaging.

Question 61

Some people object to employee participation in corporate governance on the grounds that it violates the property rights of the company's owners.

Question 62

If confidence in Chinese corporate governance continues to fall, the only risk is that foreign investors will lose trust in such corporations.

Question 63

A corporation's __________ is intended to keep watch over the CEOs.

Question 64

James Madison believed there should be a(n) __________ of powers in government.

Question 65

The critical issue for Dunfee is how to identify marketplace __________ with sufficient specificity to enable responsive __________.

Question 66

The __________ strategy calls for no change in corporate behavior.

Question 67

Reisner believes that pay package __________ will cause many CEOs to quit.

Question 68

The __________ objection to giving more employees decision-making power is a genuine obstacle to such an approach.

Question 69

Some Americans now see big business as the biggest __________ to our country's future.

Question 70

Utility may be __________ if worker satisfaction is increased when employees are given more control over corporate operations.

Question 71

McCall believes that __________ have a right to decide what goes on in a company.

Question 72

To "extend recognition to the manifesto right of employees to co-determine corporate policy" is the most theoretically legitimate __________ between competing rights claims.

Question 73

McCall offers several arguments for his thesis that __________ should have a strong voice in corporate decisions, including appeals to dignity, fairness, self-respect, and democracy, among others.

Question 74

The growing importance of boards of directors is partially a consequence, Shapiro argues, of the growing size of __________.

Question 75

Nader, Green, and Seligman argue that one of the board's roles should be to ensure that company executives obey the __________.

Question 76

Shapiro writes that corporations are more ______________ and better monitored than in the past.

Question 77

Kant believes that humans should be treated as ends in themselves, never merely as _________.

Question 78

Shapiro lists five basic tasks that a board of directors must not _____________.

Question 79

Looking at a leader's __________ during a meeting can provide clues about whether he or she is becoming disengaged from the company.

Question 80

The monotonic approach is to maximize ______________ wealth.