Business Ethics and Governance
11. An organisation's obligation to act to protect and improve society's welfare as well as its own interests is referred to as
- organisational social responsibility
- organisational social responsiveness
- corporate obligation
- business ethics
Correct answer: (A)
organisational social responsibility
12. An organization’s appropriate tone at the top promoting ethical conduct is an example of:
- Ethics sensitivity.
- Ethics incentives.
- Ethical behavior.
- Consequentialist.
Correct answer: (C)
Ethical behavior.
13. Atmospheric issues include all of the following except:
- acid rain
- global warming
- air pollution
- water quantity
Correct answer: (D)
water quantity
14. Which of the following regarding residual loss is correct?
- Bonding costs do not have an effect on residual loss.
- Residual loss is incurred by the agent because an agency relationship exists.
- Under agency theory, residual loss can be reduced to zero by good governance.
- A reduction in residual loss is likely to be the result of an increase in monitoring costs.
Correct answer: (D)
A reduction in residual loss is likely to be the result of an increase in monitoring costs.
15. Better access to certain markets, differentiation of products, and the sale of pollution-control technology are ways in which better environmental performance can:
- increase revenue
- increase costs
- decrease revenue
- decrease costs
Correct answer: (A)
increase revenue
16. Which of the following regarding corporate governance is correct?
- Corporate governance can temper growth.
- Good corporate governance can result in excessive risk-taking.
- Corporate governance often result in prompt and effective decision-making.
- The aim of corporate governance is to protect the interests of shareholders and the local economies.
Correct answer: (A)
Corporate governance can temper growth.
17. Codes of conduct and codes of ethics
- are formal statements that describe what an organization expects of its employees.
- become necessary only after a company has been in legal trouble.
- are designed for top executives and managers, not regular employees.
- rarely become an effective component of the ethics and compliance program.
Correct answer: (A)
are formal statements that describe what an organization expects of its employees.
18. Consider the following recommendations:
- a minimum of three members;
- chaired by an independent director;
- a majority of independent directors;
- can comprise executive directors.
In terms of the ASX Principles, the above requirements relate to the composition of which committees?
- The nomination and risk committees.
- The audit and remuneration committees.
- The remuneration, audit, risk and nomination committees.
- The remuneration, risk and nomination committees but not the audit committee.
Correct answer: (D)
The remuneration, risk and nomination committees but not the audit committee.
19. External audit of the accounts of a limited company is required
- because it is demanded by the company’s bankers
- by the Companies Act 2006
- at the discretion of the shareholders
- to detect fraud
Correct answer: (B)
by the Companies Act 2006
20. For referent power to be effective, what must exist between individuals in the relationship?
- Antipathy
- Rivalry
- History
- Empathy
Correct answer: (D)
Empathy