BUSENV 0060 Managerial Ethics and Stakeholder Management
NAME ____________________________________________________________________
Exam #2
- You will need to investigate answers to these questions in our readings and lectures.
- 100 points total. Note differing point values.
- Type your answers after the questions in a different font.
- Submit your completed exam no later than 5:00 p.m. March 22 as a Word attachment to an e-mail to kabala@duq.edu or stank@pitt.edu.
- In brief, make the case for advertsing. (2 pts.)
- In brief, make the case that criticizes advertising. (2 pts.)
- What is the meaning of the phrase “weasel words” as it applies to advertising? (2 pts.)
- What is required by the federal Equal Credit Opportunity Act in regard to lending? (1 pt.)
- What is required by the federal Truth-in-Lending Act in regard to lending? (1 pt.)
- The textbook sets out a “top 10” list of safety principles. Place the 10 in categories that cluster their meanings in some logical way which you explain. (3 pts.)
Explain the following 3 types of liability under the law. (2 pts. each)
- Strict liability
- Absolute liability
- Market share liability
- Explain what is meant but the phrase “tort reform.” (2 pts.)
- Provide a working definition of the term “group think.” (2 pts.)
- How did groupthink manifest itself in the NASA space shuttle case? (3 pts.)
- How did groupthink manifest itself in the 2015 Volkswagen case? (3 pts.)
- Explain 3 ways to combat group think in a decision setting (2 pts. each)
- Explain the idea of “shareholder primacy” in corporate management. (2 pts.)
- Explain the idea that ownership and control are separated in the modern corporation. (2 pts.)
Explain these terms that refer to executive compensation. (2 pts. each)
- Back dating
- Bullet dodging
- Spring loading
- Clawback
Are the actions in questions 17, 18, and 19 ethical? Why or why not? (2 pts. each)
- Back dating
- Bullet dodging
- Spring loading
- Does the U.S. government require disclosure of executive compensation? Yes No
- What is meant by the phrase “insider trading? (2 pts.)
- What is meant by the term “material information? (2 pts.)
In brief, what does the Sarbanes-Oxley Act of 2002 (SOX) require concerning the following four actors? (2 pts. each)
- Auditing firms
- Accounting firms
- CEOs
- CFOs
- Explain each of the elements of the “ethics quick test” discussed in our textbook. (6 pts.)
- Explain what David Shapira meant by the axiom “Clarify and confirm” and how to use it. (4 pts.)
The next 3 questions are derived from William D. Cohan’s article “Can Bankers Behave?”
- Christine Lagarde, managing director of the IMF, said the ongoing scandals prove that banks have not gotten the message. What does she find is the problem? (3 pts.)
- Name 2 of the 3 changes made by Morgan Stanley CEO James Gorman to senior staff remuneration?
(2 pts. each)
- What is the desired effect on banker behavior of changing compensation packages by reducing salary and increasing stock options? (2 pts.)
- Robert Hinkley proposes that 28 words be added to corporate charters to redefine corporate duties. List them and fully explain their meaning. (3 pts.)
- What agency of the U.S. government stipulates corporate disclosure of climate-related risks to their business? (2 pts.)
- Define corruption, and differentiate between bribes and grease payments. (2pts.)
- Explain 3 major features of the U.S. Foreign Corrupt Practices Act. (6 pts.)
- Corporate board member liability is limited by the “business judgment rule.” What are the 3 elements of that rule that protect board members? (6 pts.)
- When Wells Fargo CEO John Stumpf appeared before the Senate Banking Committee, what action against a division head of the company did he indicate he was not prepared to consider? (2 pts.)