Accounting
Anthropology
Archaeology
Art History
Banking
Biology & Life Science
Business
Business Communication
Business Development
Business Ethics
Business Law
Chemistry
Communication
Computer Science
Counseling
Criminal Law
Curriculum & Instruction
Design
Earth Science
Economic
Education
Engineering
Finance
History & Theory
Humanities
Human Resource
International Business
Investments & Securities
Journalism
Law
Management
Marketing
Medicine
Medicine & Health Science
Nursing
Philosophy
Physic
Psychology
Real Estate
Science
Social Science
Sociology
Special Education
Speech
Visual Arts
Business Ethics
Q:
The textbook mentions that business as a whole rarely, if ever, addresses the issue of legitimacy at the macro level. Imagine that the Chamber of Commerce approaches you to design a campaign to assure its legitimacy with the public. What kinds of issues would you address?
Q:
Which terms or definitions about regulation are true?
(A) Deregulation is the significant reduction in the regulation covering an industry.
(B) Cross-regulation occurs when one group of customers pays less than the cost and others pay more to offset that loss.
(C) Cost-of-service regulation occurs when prices are regulated based on costs that are passed on to customers, which reduces the incentive to keep costs down.
(D) Privatization is government allowing business to perform functions and services for it.
(E) The Reason Foundation advances a free society by developing, applying, and promoting conservative principles largely held by the Republican party.
Q:
Forecast how society would change if business did lose its macro level of legitimacy.
Q:
Which statements about the relationship among regulatory impact analysis, the Federal Register, and www.regulations.gov is true?
(A) All new regulations require a regulatory impact analysis (RIA), which includes a statement of the need for the proposed action, an examination of alternative approaches, and an evaluation of the benefits and costs.
(B) The RIA ends up in the Federal Register, which is a daily journal publication of rules, proposed rules, notices, and other public regulatory information.
(C) The Federal Register, the Regulations.gov website enables users to find, view, and comment on regulations for all federal agencies.
(D) The Office of Information and Regulatory Affairs is a branch of the judicial branch of government.
(E) The goal of an RIA is to ensure that the regulation is really needed.
Q:
Summarize the responsibilities that corporations should have toward their shareholders.
Q:
Which of the following is not part of the organizational structure of the federal executive branch of government?
(A) Executive Office of the president
(B) Independent agencies and government corporations
(C) Boards, commissions, and committees
(D) Quasi-official agencies
(E) The cabinet executive departments and their agencies
Q:
Why are church groups particularly visible in the shareholder activist movement?
Q:
Advisory panels and committees are overseen by ________.
(A) the General Accounting Office
(B) the Federal Oversight Administration
(C) various advisory panels
(D) Political Action Administration
(E) General Services Administration
Q:
The role of ________is to provide expert information to the government on proposed regulations.
(A) interest group
(B) radical coalition
(C) paid registered lobbyists
(D) advisory panels and committees
(E) CEOs and CFOs
Q:
List the reasons that good candidates for corporate board positions are hard to find.
Q:
Why is insider trading illegal and considered unethical? Isn't that exactly what financial markets are supposed to do--reward those who make good decisions?
Q:
When businesses work together by providing increased pressure on government to meet their interests, giving business bargaining power, it is called ___________.
(A) coalition building
(B) testifying
(C) lobbying
(D) regulating
(E) free-riding
Q:
Why is the generous nature of CEO retirement packages particularly frustrating to the public?
Q:
________ is considered the most important political strategy because more time, effort, and resources are devoted to this than to any other political strategy.
(A) Deregulating
(B) Lobbying
(C) Protesting
(D) Testimony
(E) Social networking
Q:
What are the two main issues associated with CEO pay?
Q:
Quasi-official agencies are official executive agencies but are required by statute to publish certain information on their programs and activities in the Federal Register.
(A) True
(B) False
Q:
Why are inside directors seen as problematic in corporate governance?
Q:
Define political information strategies.
Q:
What is the difference between an owner and an investor?
Q:
The ______ established the National Labor Relations Board (NLRB).
(A) Taft-Hartley Act
(B) Wagner Act
(C) Sarbanes-Oxley Act
(D) Securities and Exchange Act
(E) Clinton-Gore Act
Q:
What is the primary problem inherent in management control of the firm?
Q:
Which statement describes the role of Congress in how business rules are made and enforced?
(A) Congress passes statutes and delegates the responsibility of writing the rules to regulatory agencies with the power to enforce the rules.
(B) Congress can determine if rules are constitutional, interpret rule meanings as they are applied to business.
(C) Congress makes the rules and enforces them.
(D) Congress determines if rules are constitutional, interpret their meaning and how they are applied, and determine litigation for breaking the rule.
(E) Congress does not create regulatory agencies; the Executive Branch does that.
Q:
Describe how the separation of ownership and control came about.
Q:
A ________ monopoly occurs when one large business can supply the entire market more efficiently and cheaply than several small firms due to economies of scale.
(A) clear-cut
(B) mitigating
(C) economical
(D) efficient
(E) natural
Q:
The ________ gives federal laws precedence over state laws.
(A) Bill of Rights
(B) legislative process
(C) supremacy clause
(D) lobbying coalition
(E) Continental Congress
Q:
The fact that company information should be made at regular and frequent intervals and should contain information that might affect the investment decisions of shareholders is contained in the concept of
a. full disclosure.
b. transparency.
c. open door reporting.
d. both full disclosure and transparency.
Q:
The prisoners' dilemma is a situation in which if one competitor uses a strategy to gain an advantage, the others must follow, even when all lose.
(A) True
(B) False
Q:
One of the main ways in which shareholder activists communicate their concerns to management is through
a. the Internet.
b. blogging.
c. advertisements in mass media outlets.
d. shareholder resolutions.
Q:
Stakeholders have gained less power over business over time.
(A) True
(B) False
Q:
Shareholder activism
a. was started by the counter culture during the 1960s.
b. has been around for more than sixty years.
c. is lead by the Roman Catholic church.
d. relies on large institutional investors to introduce most of the shareholder resolutions.
Q:
Many federal laws have been passed that have affected businesses.
(A) True
(B) False
Q:
Boards are now being tougher on CEOs for all of the following reasons except
a. increasing diversity on boards.
b. competitive economic conditions.
c. rising vigilance of outside directors.
d. increasing power of large institutional investors.
Q:
The American Civil Liberties Union works to advance the fundamental principles of free-market enterprise, limited government, and federalism at the state level through a nonpartisan public-private partnership of America's state legislators, members of the private sector and the general public.
(A) True
(B) False
Q:
The board committee that is responsible for responding to social issues is the
a. ethics committee.
b. public policy committee.
c. community interface committee.
d. rapid response committee.
Q:
The legislative process includes committee action; floor action; conference action; a vote by both chambers; presidential approval; and, if vetoed, Congress.
(A) True
(B) False
Q:
The board's compensation committee has responsibility for
a. setting directors' pay scales.
b. making sure that all employees are paid a fair wage.
c. evaluating executive performance and recommending terms and conditions of employment.
d. determining what bonuses should be paid and to whom.
Q:
However, most bills that don't get passed never make it past the committee stage.
(A) True
(B) False
Q:
The board committee that has the primary responsibility of ensuring that competent, objective directors are selected is the
a. qualifications committee.
b. personnel standards committee.
c. compensation committee.
d. nominating committee.
Q:
Congress does not have the power to impeach or remove any civil officer.
(A) True
(B) False
Q:
Which of the following is a step to board repair?
a. Seeking outside help in identifying potential risks
b. Increasing executive compensation
c. Using dependent compensation consultants
d. Reducing involvement in corporate strategy
Q:
Republicans are generally more liberal regarding moral issues and in favor of more government regulation, more spending, and more taxation.
(A) True
(B) False
Q:
The principal responsibilities of the audit committee are to
a. interview auditing firms to do the company audit.
b. negotiate with the Internal Revenue Service in the event of a tax audit.
c. ensure that published financial statements are not misleading.
d. hire the Chief Financial Officer (CFO) and monitor that person's work.
Q:
The board committee responsible for assessing the adequacy of internal control systems and the integrity of financial statements is the
a. finance committee.
b. monetary policy committee.
c. arbitrage committee.
d. audit committee.
Q:
Businesses is a centralized, one-stop platform to make it easy for businesses to access services to help them grow and hire.
(A) True
(B) False
Q:
A new trend in board recruiting focuses more on
a. networking skills.
b. experience than title.
c. business school professors.
d. foreign investors.
Q:
Once the president proposes the national federal budget, it immediately goes into law.
(A) True
(B) False
Q:
Which of the following is not on the ranking of red flags that signal board problems?
a. Company has to restate earnings
b. Poor employee morale
c. Poor customer satisfaction track record
d. Stock price increases
Q:
The Supreme Court signs statutes into law.
(A) True
(B) False
Q:
Sarbanes-Oxley attempts to ensure auditor independence is by
a. limiting the nonauditing services an auditor can provide.
b. requiring auditing firms to rotate the auditors who work with a specific client.
c. making it unlawful for accounting firms to provide auditing services where conflicts of interest exist.
d. all of these.
Q:
Rules are developed by regulatory agencies to implement laws passed by Congress.
(A) True
(B) False
Q:
The primary purpose of the Sarbanes-Oxley Act is to
a. provide rules regulating the relationship between CEOs and boards.
b. limit the power of corporate boards.
c. restrict the flow of corporate money into politics.
d. provide better protection for investors in public companies by improving the financial reporting of those companies.
Q:
Because companies don't want the public to know about negative aspects of their products, products are required by law to provide labels about product contents and warnings.
(A) True
(B) False
Q:
Personal liability for a corporate board member means that
a. directors have a legal obligation to pay all debts of the corporation.
b. directors have a legal obligation to pay all debts of the corporation if the company cannot.
c. directors may be sued for breach of fiduciary duty.
d. directors have a personal responsibility to the shareholders.
Q:
_______ policy focuses on the well-being of citizens to solve societal problems.
(A) Trade
(B) Taxation
(C) Fiscal
(D) Congressional
(E) Social
Q:
Companies that elected to provide meaningful information to shareholders and securities professionals without also informing small investors were practicing
a. insider trading.
b. programmed trading.
c. selective disclosure.
d. stair-stepping.
Q:
Which of the following is not counted among the powers of Congress?
(A) Create laws
(B) Override presidential veto
(C) Amend the Constitution with two-thirds of the states' approval
(D) Hear international lawsuits between the United States and other countries.
(E) Confirm Presidential appointments
Q:
The Securities and Exchange Commission's Regulation FD is designed to
a. streamline the trading process.
b. change stock trading prices to the decimal system.
c. allow small investors to benefit from insider trading.
d. limit the common practice of selective disclosure.
Q:
Which statement accurately describes how a bill becomes a law?
(A) Committee action, Floor action, vote by both chambers, goes to the President. If vetoed, Congress can override veto with a majority of both chambers.
(B) Committee action, Floor action, Conference action, vote by both chambers, goes to the President. If vetoed, Congress can override veto with two-thirds of both chambers.
(C) Committee action, Conference action, vote by both chambers, goes to the President. If vetoed, Congress can override veto with two-thirds of both chambers.
(D) Committee action, Floor action, Conference action, vote by both chambers, goes to the President. If vetoed, Congress can override veto with a majority of both chambers.
(E) None of these is correct.
Q:
The practice of obtaining critical information from within a company and then using that information for one's own financial gain is
a. arbitrage.
b. programmed trading.
c. insider trading.
d. hedging.
Q:
Which statements about political information strategies and message framing are true?
(A) Politicians' primary concern is getting reelected and serving their constituent voters.
(B) Political information strategies focus on how the business side of the issue will benefit politicians and their constituents.
(C) Businesses give information containing facts and figures using outside sources, experts, and stakeholders' support to inform the politician of the consequences of future public policy.
(D) Message framing is important to a business because the terms it uses to tell its side of an issue influence public sentiment for or against the firm.
(E) Researchers find that firms are most likely to engage in political strategies when the government significantly affects their business
Q:
Which of the following are true regarding legislative committees?
(A) Committees specialize in different issue areas, such as budget or small business, and are made up of small groups of senators or representatives.
(B) All bills eventually make it to the committee stage.
(C) The committee may decide the bill is unnecessary and table it, thus killing it at once.
(D) The subcommittee sends the bill with amendments back to the full committee where more hearings and revisions may take place, and a full committee vote is taken.
(E) Subcommittees are used to kill bills that are not deemed worthwhile.
Q:
Which of the following is not an argument against the use of golden parachutes?
a. The covered executives are already being well paid for their work.
b. The covered executives are given an incentive to run the company poorly.
c. The covered executives are being rewarded for failure.
d. The covered executives are giving themselves the golden parachutes.
Q:
A contract in which a corporation agrees to make payments to key officers in the event of a change in the control of the corporation is called
a. a golden parachute.
b. golden handcuffs.
c. greenmail.
d. the silver rule.
Q:
Which of the following are part of the legislative process?
(A) Committee action
(B) Floor action
(C) Conference
(D) Veto by the president
(E) Hearing from the Supreme Court
Q:
A shareholder rights plan aimed at discouraging or preventing a hostile takeover is known as
a. a poison pill.
b. golden handcuffs.
c. a golden parachute.
d. insider trading.
Q:
The government provides billions of dollars to individuals, often called _______ including welfare, medical care, and social security.
(A) federal loans
(B) escrows
(C) entitlements
(D) subsidies
(E) transfer payments
Q:
A major criticism of CEOs and boards during the 1980s, when corporate takeovers were regular occurrences, was
a. not trying to get the best price they could for shareholders.
b. focusing on "making deals" instead of running the business.
c. trying to run up the price of their company's stock in preparation for the sale.
d. being obsessed with self-preservation instead of making optimal decisions on behalf of shareholders.
Q:
Which statements about public policy are true?
(A) Fiscal policy determines the supply, demand, and value of our U.S. currency.
(B) Industrial policy directs resources to the development of specific industries.
(C) Taxation policy changes tax rates to encourage or discourage spending.
(D) Trade policy encouraging or discouraging international trade with specific countries.
(E) Government economic policies make only a small impact on economic development.
Q:
Compensation recovery mechanisms that enable a company to recoup compensation funds is called ____.
a. proxy process.
b. risk arbitrage.
c. golden parachutes.
d. clawback provisions.
Q:
Which statements about the branches of the federal government are correct?
(A) The legislative branch, which makes the laws, includes Congress (the Senate and the House of Representatives).
(B) The executive branch includes the President and Cabinet departments.
(C) The regulatory branch includes agencies that enforce the laws.
(D) The judicial branch includes the courts that determine the constitutionality of laws, interpret their meaning, and conduct trials.
(E) The judicial branch includes courts that judge executive actions to be unconstitutional though the power of judicial review.
Q:
The Say on Pay movement:
a. First began with regulations including a requirement to put a remuneration report to a shareholder vote
b. Began in the United States
c. Evolved from concerns over low executive compensation
d. Is supported by the SEC
Q:
Which statement about political campaign contributions is not true?
(A) Politicians are not indebted to large donors, and as a result, do not influence regulations or the enactment of bills into law.
(B) Political action committees (PACs) are company-sponsored methods of obtaining campaign funds from employees and distributing the funds to candidates.
(C) Hard money is a direct contribution to a candidate's political campaign.
(D) Soft money is a contribution to a political party committee for use in party-building activities.
(E) Businesses can encourage their employees and stockholders to register and vote but may not recommend how they should vote.
Q:
Executive Excess reports that in 2014 the ratio of CEO pay to average workers' pay was:
a. 531 to 1.
b. 216 to 1.
c. 1,063 to 1.
d. 18 to 1.
Q:
Directors who have no ties to the firm other than membership on the board are called
a. dependent directors.
b. free agent directors.
c. inside directors.
d. outside directors.
Q:
Firms will engage in political strategies when the government significantly affects their business. Which of the following is not affected by these strategies?
(A) large firms
(B) those highly dependent on government regulation
(C) small firms with little regulation
(D) those highly dependent on government contracts
(E) those operating in more highly concentrated industries
Q:
Directors who have some sort of ties to the firm are termed
a. dependent directors.
b. independent directors.
c. inside directors.
d. outside directors.
Q:
Message ________ refers to the terms used to gain public sentiment for one's side of an issue.
(A) articulation
(B) sequestering
(C) dissemination
(D) forming
(E) framing
Q:
Boards have recently improved in all of the following ways except
a. more directors are independent.
b. reducing executive pay.
c. more directors own stock in the company.
d. more boards are likely to demand change.
Q:
Which of the following is not a law regarding labor legislation?
(A) The U.S. Foreign Corruption Act of 1977
(B) The Fair Standards Act of 1938
(C) The Worker Adjustment Retraining Notification Act (WARN) of 1988
(D) The Occupational Safety and Health Administration (OSHA) Act
(E) Employee Polygraph Protection Act of 1988
Q:
When the interests of management and owners are not aligned, there will likely be a(n)
a. agency problem.
b. free agency dilemma.
c. shareholder rebellion.
d. shareholder resolution.