Q&A Hero

Q: Who paid fines in relation to the Facebook IPO? a. Morgan Stanley b. NASDAQ c. Both a and b d. No one was fined because the IPO was not issued yet

Q: How long after the Facebook IPO was issued was litigation filed? a. Two months b. There is no litigation because the IPO was postponed indefinitely c. Three months d. Three days

Q: The shift of consumers from the use of computers to smart phones and its impact on Facebook: a. Was fully disclosed in the original prospectus for the company's IPO b. Was not material for purposes of disclosure on its IPO c. Was not fully disclosed in Facebook's prospectus d. Was not relevant to Facebook's profitability

Q: Facebook's IPO was: a. The third largest in Wall Street history. b. A fraud. c. Issued without registration. d. Postponed indefinitely.

Q: The crux of Mr. Blagojevich's defense was:a. "That's the way it has always been done."b. "It's a gray area."c. There was no conflict.d. Phone conversations are not evidence of a crime.

Q: Former Governor Rod Blagojevich:a. Was convicted of asking for kickbacks.b. Was convicted of bribery.c. Was convicted of lying to the FBI.d. Was acquitted on all charges.

Q: Intel's biggest obstacle in its Pentium chip flaw was: a. The cost of replacement. b. Admitting that there was a problem and acknowledging it to the public. c. The hit to earnings if the sales were not made. d. Both a and c e. None of the above

Q: What was the total cost if Intel replaced all chips? a. $100 million b. $200 million c. $260 million d. $360 million

Q: What company changed Intel's reaction to the flawed chips? a. Dell b. Microsoft c. IBM d. Apple

Q: What was Intel's original proposal on the flawed chips? a. To replace them without questions b. To replace them only for computer users who had to do calculations c. To replace them only for a fee d. None of the above

Q: Who made the Intel error problem public? a. Intel b. A mathematician professor c. IBM d. None of the above

Q: What did Intel discover when it ran tests on the Pentium chip? a. That it would make an error once every 27,000 years b. That the chance of an error was one in 9 billion c. That the floating point error problem was not one that required attention d. a and b only e. a, b and c

Q: How much money had Intel spent developing the Pentium chip? a. $150 million b. $500 million c. $600 million d. $1 billion

Q: What error did Intel discover in its Pentium chip in July 1994? a. That the chip was contaminated b. That there was a floating point error that caused errors in division calculations c. That the chip could cause computer viruses d. None of the above

Q: The Cornell researchers did not have a conflict because the funding for their lung cancer research did not come directly from the tobacco companies.

Q: The Red Cross CEO resigned in protest over the use of Red Cross funds.

Q: The Red Cross disclosed that 9-11-01 funds would be used for administrative purposes.

Q: Checking the books and records of an organization is one method for establishing the legitimacy of its claims.

Q: Nonprofits have fallen victim to widespread Ponzi schemes.

Q: Nonprofits are permitted to use raised funds in any manner they deem acceptable.

Q: Nonprofits and their boards need not be concerned with conflicts of interest.

Q: Failure to disclose the dangers of a diet program is an ethical issue.

Q: Telling a customer he needs repair work done on a vehicle when the vehicle is in fine condition is unethical and misrepresentation.

Q: The withholding of material information in a contract relationship is an ethical issue as well as misrepresentation.

Q: The failure to disclose material information in negotiations is an ethical breach.

Q: Intentional breach of a contract carries a legal remedy, but it is also unethical.

Q: With respect to #4, it is not necessary for the company to take any action to correct the problem or refund money for those who already own the new calculator.

Q: The failure to correct a known defect in a product is both an ethical lapse and a basis for a negligence claim.

Q: Discuss the ethics of posing as another for purposes of investigating an issue or organization.

Q: Discuss the actions of the Duke faculty members with their ad and their follow-up conduct.

Q: Explain the evolution of an individual baseball player using performance enhancing drugs (PEDs) to it becoming a societal issue.

Q: A group of food retailers and manufacturers banded together to self-regulate their ads, particularly on the Internet, for their products. Discuss why the manufacturers and retailers would make such a joint agreement?

Q: Why do companies have moral clauses in their contracts with stars who are appearing in their ads?

Q: In 2008, Starbucks placed a red light on 600 planned openings. Starbucks says it was excused from the leases because of economic conditions. Landlords note that Starbucks is driving down property values by allowing the leased spots to lie fallow. The landlords also note that they are victims because Starbucks' expansion plans were too ambitious, even for a good economy. Discuss the social responsibility of Starbucks in this situation.

Q: The American Board of Internal Medicine (ABIM) has taken some sort of disciplinary action against 140 docs who cheated on their ABIM certification exams. In a lawsuit that the ABIM had filed previously against Arora Board Review, a company that does exam review courses for certification, the discovery process yielded information that proved to be more damaging for the docs than for Arora. The documents in the now-settled case included e-mails and other correspondence from the docs to Arora. The e-mails and correspondence revealed that the docs knew many of the questions and, indeed, followed up by sending along memorized test questions from their own certification exams to Arora in order to help the cert-docs-in-waiting along. List the stakeholders in this situation.

Q: In November 2009, a large cache of e-mails and technical documents from the Climate Research Unit (CRI), part of the University of East Anglia in Great Britain, appeared on several Internet file-servers and could be downloaded by the public. The University has yet to determine whether the posting of the proprietary files were the result of a hacker's effort or whether they were posted by a whistleblower with CRI.CRI's research and data have been used by the UN's Intergovernmental Panel on Climate Change (IPCC) as the basis for its support for both the Kyoto and Copenhagen Protocols, a form of international treaty that would have countries agree to curb their carbon emissions. The Kyoto Protocol fizzled when the United States declined to adopt it. The meeting at Copenhagen for the adoption of emissions standards began on December 7, 2009. Fossil-fuel industries would be affected by the Protocol. Those industries include oil and gas, auto industry, and fossil-fuel based utilities (coal, oil, and gas). Those industries did undertake voluntary reductions following the demise of the Kyoto Protocol. To date, businesses and industries in the United States have achieved one-half of the reductions that Kyoto would have mandated.The 1,000+ e-mails from the scientists at CRI reveal what MIT scientist Michael Schrage has called "malice, mischief, and Machiavellian maneuverings" among the scientists with regard to their data and research on climate change. The e-mails include the following revelations:Ongoing efforts to manipulate the peer-review process for manuscripts that were submitted for publication in academic journals if those manuscripts challenged the research and conclusions of CRI scientists.From: Phil Jones. To: Many. March 11, 2003"I will be emailing the journal to tell them I"m having nothing more to do with it until they rid themselves of this troublesome editor."Professor Jones appears to be lobbying for the dismissal of the editor of Climate Research, a scientific journal that published papers downplaying climate change.From Phil Jones To: Michael Mann (Pennsylvania State University). July 8, 2004"I can't see either of these papers being in the next IPCC report. Kevin and I will keep them out somehow " even if we have to redefine what the peer-review literature is!"There was considerable disagreement acrimony among the CRI scientists about the results, meaning, and interpretation of their data and work " something not revealed in either their publications or speeches.Significant portions of data from CRI were withheld from public disclosure or examination by scientists outside CRI.University of Arizona professor Jonathan Overpeck expressed concern to his colleagues in the e-mails, "Please write all e-mails as though they will be made public."CRI scientists ignored requests for the release of raw data.One CRI scientist deleted his e-mails after demands for the data were made public. However, he neglected to delete an e-mail that revealed his actions in response to a British Freedom of Information Act (BFOIA), "I am supposed to go through my emails and he can get anything I"ve written about him. About 2 months ago I deleted loads of emails, so have very little " if anything at all." There is an investigation of possible violations of the BFOIA.That the CRI scientists were aware that the reconstruction of the earth's climate (paleoclimatology) during periods prior to actual human measurement and recording is a massive and complicated undertaking that is dependent upon statistical interpretation of raw data, interpretation that would ordinarily result in intense academic controversy. However, the e-mails reflect efforts to prevent or obscure the controversy. Again, CRI Scientist Phil Jones' e-mail:From: Phil Jones. To: Many. Nov 16, 1999"I've just completed Mike's Nature [the science journal] trick of adding in the real temps to each series for the last 20 years (i.e., from 1981 onwards) and from 1961 for Keith's to hide the decline."An e-mail from a U.S. climatologist included in the releases reflected, "I support the continued collection of such data, but I am disturbed by how some people in the paleo community try to oversell their product."Another scientist wrote, "I"m not political. If anything, I would like to see the climate change happen, so the science could be proved right, regardless of the consequences."An outside scientist brought into the loop wrote, "That fact is that we can"t account for the lack of warming at the moment [since 1998] and it is a travesty that we can"t."The University of East Anglia is conducting an investigation of the e-mails and CRI, but has warned, "The selective publication of some stolen emails and other papers taken out of context is mischievous and cannot be considered a genuine attempt to engage with this issue in a responsible way."Prominent government and NGO officials have responded by indicating that regardless of the conduct of the scientists there is a climate problem that must be addressed.List all of the ethical issues you see. Be sure to include a discussion of any social responsibility issues that you see.

Q: Lee Iacocca, chairman and CEO of Chrysler Corporation, announced on January 27, 1988, that the automaker would be closing its Kenosha, Wisconsin, plant. Iacocca and his board of directors were under significant pressure from shareholders due to Chrysler's continuing poor financial performance. Chrysler had acquired the Kenosha plant when it purchased American Motors Corporation in 1987. In his announcement, Iacocca blamed national trade policy for Chrysler's declining sales and resultant earnings problems. At the Kenosha plant, which manufactured the Dodge Omni and the Plymouth Horizon, 5,500 of the 6,500 workers were to be laid off and production moved to a Detroit plant. Kenosha, a city of 77,000 on the shores of Lake Michigan, depended heavily on Chrysler's presence. The announcement of the closing came at a critical time. Chrysler was negotiating to renew its contract with the United Auto Workers (UAW). Also, the Kenosha plant carried a history of union financial assistance. The UAW had loaned American Motors over $60 million to keep the Kenosha plant running, and Chrysler had assumed the loan obligations as part of the acquisition. Also, Wisconsin had paid $5 million for job training at the Kenosha plant in 1987 after Chrysler promised that the plant would build Omnis and Horizons for at least five more years. Peter Pfaff, a member of the UAW Local 72 of Kenosha and an employee at the plant since 1972, said: "I was there. We"ve got it on tape and in writing. They said they"d stay. Greenwald (then Chrysler Motors chairman) keeps saying Chrysler never said that, but I was there when he said it." The Kenosha local threatened to delay negotiations on renewing the national contract with 64,000 workers. After the threat, Iacocca announced that Chrysler would establish a $20 million trust fund to aid the 5,500 Kenosha workers through housing payments and educational funding. This fund would be in addition to severance pay, extended unemployment benefits, and repayment of the UAW loans. While denying that Chrysler was setting a precedent, Iacocca declared it had a "moral obligation" to Kenosha. Wisconsin threatened to sue Chrysler over the job training program but agreed to hold off in exchange for Iacocca's promise to extend production at the plant for several months into the fall of 1988. Iacocca stated that Chrysler was "guilty as hell of being cockeyed optimists. Blame us for being dumb managers, for spending $200 million to put two old cars (the Chrysler Fifth Avenue and the Dodge Diplomat) in an eighty-six-year-old plant, but please don"t call me a liar when I"ve got to close it sooner than I thought." Iacocca sought congressional support for converting the Kenosha plant to defense work by Chrysler. Chrysler and the UAW negotiated a contract that provided additional unemployment benefits for the 5,500 laid-off workers and more job security for the 1,000 workers who would transfer to other Chrysler operations. Ultimately, the plant closing resulted in 3,700 layoffs. By mid-1990, Kenosha was enjoying unprecedented economic growth. At a July 1990 ceremony in which engineers detonated explosives to destroy the 250-foot-high smokestack of the Chrysler plant, dignitaries and former workers cheered. Kenosha resident T. R. Garcia said at the blasting, "I think it's about time they got rid of it. What we need to do is develop the lake front, and this thing is the last to leave." City planner Ray Forgianni, Jr., added, "The community's image is probably the best it's been in 100 years. The closing was almost like a catalyst. The handwriting was on the wall-the economy needed to diversify." a. Did Chrysler have a moral obligation to the Kenosha workers and Wisconsin, or was it just responding to pressure? b. Do arrangements like Chrysler had with the UAW loans and Wisconsin interfere with the ability to make business decisions? Review Iacocca's quote on business mistakes as you evaluate the issue. c. Were the shareholders required to pay twice for the closing - once in severance pay and again in extended benefits? d. Was Chrysler simply putting its duty to shareholders above its duty to Wisconsin, Kenosha, and its workers? Is this proper? Is it ethical? e. Was Chrysler's action just a catalyst for needed economic development? f. Iacocca, after having stepped down as chairman of Chrysler, made a takeover offer for Chrysler in 1995. What would Chrysler's ethical culture be like if Mr. Iacocca had succeeded in his takeover bid?

Q: Why does Michael Novak distinguish corporations' responsibilities?

Q: List and explain three schools of ethical thought.

Q: Explain who stakeholders are.

Q: Discuss the benefits for a company of not downsizing, as in the case of Aaron Feuerstein and Malden Mills.

Q: Fifty-nine auto dealers around the country were fined $200,000 by the Department of Labor for child labor violations. The car dealers hire 16- and 17-year olds to move cars from service bays to customer pick-up areas and from lots to show rooms. They are also employed to wash cars. The teenagers move the cars literally only hundreds of feet in the process, but they are driving the cars. Under the Fair Labor Standards Act and the federal regulations, only those employees who are age 18 or above are permitted to drive as part of job requirements. The fine for a violation is $1,100. The Department of Labor contacted dealerships and asked for the names of their employees under the age of 18. Once the Department had the names, it contacted the young employees to question them about their job duties. Upon discovery of the driving, the dealerships were fined. About one-half of the dealerships have paid the fines and the remainder are protesting. The result has been that dealerships will now employ only those who are 18 and older because it is impossible to have an employee responsible for washing cars and not be able to move the car. The result has been that many special job programs for minority students and students in vocational schools have been eliminated. a. Do you think this type of driving was intended to be covered in the child labor statutes? b. Are auto dealers taking advantage of children or helping them?

Q: Albertson's, the grocery retailer, has the highest profit margins in the industry at 6%. A union has filed suit against Albertson's for its "off-the-clock" without pay practices with respect to manager trainees. These trainees worked 4-5 hours extra each week without pay and did not complain because of promises of progression in the organization. When progression did not materialize, the trainees returned to checking positions and their union filed a class action suit on their behalf. The potential for back pay and penalties in the case is $200 million. Albertson's notes that some managers may prod trainees to work longer without pay but that such is not company policy. a. Who is responsible for the "off-the-clock" policy? b. Is it each store manager or Albertson's? c. Is "off-the-clock" an ethical policy?

Q: Leslie Fay Companies was a clothing conglomerate that produced lines of women's clothing and lingerie under the brand names Leslie Fay, Joan Leslie, Albert Nipon, Theo Miles, Kasper, Le Suit, Nolan Miller, Castleberry, and Castlebrook. In early 1993, it was discovered that senior Leslie Fay executives, in an effort to inflate profits and to mask an actual loss of $13.7 million, had perpetrated an accounting fraud. Paul Polishan, Leslie Fay's chief operating officer, was placed on leave without pay in January 1993, along with Donald F. Kenia, the corporate controller. Mr. Kenia had first alerted the company to the accounting manipulations and worked with auditors to untangle the books. By April 1993, Leslie Fay, under intense pressure from creditors, filed for Chapter 11 bankruptcy (reorganization) in Manhattan. Both Mr. Polishan and Mr. Kenia were fired. Mr. Kenia, charged with two counts of filing false statements with the SEC, has entered into a plea bargain with the U.S. Attorney in exchange for his cooperation in the continuing investigation of the Leslie Fay accounting improprieties. Also in April 1993, two new outside directors were named to the Leslie Fay board. The audit committee of the board discovered, through continuing investigation, that accounting irregularities had inflated the company's profits for at least five quarters beginning in the fall of 1990. As Leslie Fay continued its climb from bankruptcy, it was discovered that its law firm, Weil Gotshall & Manges, had failed to disclose its close ties to two board audit committee members. A federal bankruptcy judge ordered the law firm to pay fines totaling $800,000, which was the cost of having an independent review of the law firm's representation and conduct in the case. In March 1995, Leslie Fay placed its flagship dress and retail business up for sale and offered its CEO a success fee of $1.5 million if those businesses were sold. Also in March 1995, a report detailing accounting improprieties was released by the audit committee of the Leslie Fay board. The board found that when executives realized they would not meet pre-established goals, they would ship goods out to a Wilkes-Barre, Pennsylvania, facility to inflate sales. The executives also forged inventory tags, multiplied the value of inventory, developed phantom inventory and altered records to meet sales target. Some goods were invoiced to be shipped in the final day of a quarter even though they were not actually shipped until the next quarter. Numerous shareholders have filed suit against the Leslie Fay board and BDO Seidman, the company's auditor during this period. John Pomerantz continued as CEO from 1993 onward. The company has tried to find a buyer but has remained unsuccessful in doing so. a. What signals about the importance of earnings at Leslie Fay were sent to the officers who committed the accounting improprieties? b. Wouldn"t employees have been aware of the financial fraud? Why didn"t they speak up? Why didn"t they tell someone? c. How might Leslie Fay have prevented what happened? d. If you were the new chief financial officer, what message would you most want to impress upon all Leslie Fay employees? e. Of what significance are the law firm's ties to the board's audit committee members? Did these ties set a poor tone at the top?

Q: Using the MLB steroids case as an example, explain how unethical choices by some players harms players who comply with the rules.

Q: Describe Dayton-Hudson's experience with charitable contributions.

Q: How would you describe Adelphia's treatment of its stakeholders?

Q: Describe a situation in which Dr. Friedman would support a corporation taking voluntary or socially responsible action.

Q: The North Carolina State Bar: a. Accepted Mr. Nifong's resignation as DA as sufficient punishment. b. Disbarred Mr. Nifong. c. Censured Mr. Nifong. d. Found no violations of the professional code of ethics by Mr. Nifong.

Q: The Duke LaCrosse players: a. Were ultimately found guilty of some criminal charges. b. Were exonerated by the North Carolina attorney general. c. Had their charges dropped by Michael Nifong. d. None of the above

Q: Former Prosecutor Michael Nifong of Durham County, North Carolina: a. Withheld evidence from defense attorneys. b. Conducted line-ups inappropriately. c. Embezzled from the county. d. Both a and b e. a, b and c

Q: What did Herman Miller gain through its environmental initiatives?a. Extra costsb. Solid reputation with regulatorsc. Cost savingsd. b and c onlye. a and b onlyf. All of the above

Q: What methods do businesses use to obtain minority-owned business status? a. Hold ownerships with a silent minority partner b. Relocate in order to have minority employees c. Use a name that carries minority connotations d. All of the above

Q: What happened with Solyndra? a. It was a successful green energy company b. It was forced to file bankruptcy c. It was acquired by a Chinese firm d. It repaid its government funding

Q: What happened to Donald Kennedy, the president of Stanford University, after the audit of the school's overhead research costs? a. He was made a U.S. Ambassador b. He was charged criminally c. He resigned as president of Stanford d. He successfully challenged the government's position

Q: What issue did the federal auditor raise about Stanford's research overhead expenses? a. That the paperwork was not complete b. That there are no overhead reimbursement for grants c. That the overhead expenses submitted did not seem right d. That the overhead expenses violated the rules

Q: What impact has the demand for biofuels had in countries like Guatemala? a. High employment and increasing incomes b. Introduction of farming technology c. Lower taxes d. Less food and higher prices

Q: What issue affects farmers' markets?a. Outbreaks of Salmonella, E-Coli, and Hepatitisb. That their growth is cutting grocery marginsc. That new federal regulations apply to themd. None of the above

Q: Where is the GM Volt today? a. Selling well b. Selling slightly less than projections c. Production is halted and sales goals will not be reached d. GM is in bankruptcy

Q: What was unique about the compounding industry? a. It was neither a state nor federally regulated industry b. It had pressure to produce compounds quickly and cheaply c. It did not always comply with regulatory requirements d. It had no ethical issues

Q: How much of a rebate did the government offer GM Volt buyers? a. $5,000 b. $7,500 c. $10,000 d. 5%

Q: What was the price of the GM Volt?a. $7,500b. $26,000c. $41,000d. $52,000

Q: What is the average wage of a cruise ship worker? a. $900 - $950/month b. $700 - $750/month c. $500 - $550/month d. $400 - $450/month

Q: Where are most cruise companies paying taxes? a. United States b. United Kingdom c. Bahamas d. None of the above

Q: Which is the number one cause of mortgage foreclosures? a. Loss of employment b. Negative equity c. Poor credit score d. Low down payment

Q: What problem does the United States face in criminal investigations of cruise line events? a. Lack of evidence b. Lack of jurisdiction c. Lack of sufficient resources d. There is no problem because the ICCL requires cruise lines to cooperate

Q: At what level of ethical lapses is the use of PEDs by players? a. Individual b. Company/organization c. Industry d. Society

Q: What affects company/organizational lapses? a. Incentive plans b. Individual ethical standards c. Ethics codes d. Ethics training

Q: What types of ethical issues occur at the societal level? a. Dabbling in gray areas b. Falsification of records c. Cheating on exams d. Insider trading

Q: What types of ethical issues occur at the individual level? a. Inflated travel expenses b. Falsification of financial statements c. Gray area activities d. Cheating on exams

Q: What happened when Smith & Wesson broke rank and decided to settle the gun litigation? a. It was touted as a good company and its earnings went up b. It lost its customer base c. It slowed down the gun regulatory cycle d. It was able to sell more guns at higher prices

Q: Which of the following best describes Craigslist's liability for content on its site? a. It is liable for any criminal activity that results from posting on its site b. It does not have an obligation to remove ads that involve criminal activity c. It must screen all ads d. None of the above

Q: Which of the following is a characteristic of the gun regulatory debates? a. Accurate factual information b. Bipartisan agreement c. Emotion d. All of the above

Q: What was the Wrigley company's concern in the use of Skittles in honoring Trayvon Martin? a. That the company would be associated with murder b. That it would be perceived as capitalizing on the death of a teen c. That its brand would suffer d. None of the above

Q: What happened to the prosecutors in the Stevens case? a. They were cleared of any misconduct b. They were disbarred c. One committed suicide d. None of the above

Q: John Mackey believes which of the following? a. He agrees with Kelly's views b. He believes "service to others" should be the corporate mantra c. He believes that Friedman's views are correct d. He believes that Halfon's views are correct

Q: Which formula does Kelly propose for corporate finances? a. Profit = revenues - cost b. Profit = revenues - employee income c. Profit = revenues - employee income + cost of materials d. Profits = employee income

Q: Why does John Mackey believe many people go into business? a. To maximize profits b. To lift wages of employees c. To offer a service or product that meets a need d. For personal wealth

Q: The music industry's warning labels on CDs: a. Represent a new regulation of rock music. b. Are an unconstitutional infringement of free speech. c. Are a means of halting the regulatory cycle. d. Were voluntary and initiated originally because of industry self-examination. e. None of the above

Q: What was the amount of Fannie Mae's restatement of its revenue? a. $125 million b. $90 million c. $115 million d. $6.3 billion