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Multiple Choice Questions

Q.1. What is meant by the phrase CSR?

a) Corporate Social Responsibility
c) Corporate Society Responsibility
Ans: a

b) Company Social Responsibility

d) Company Society Responsibility

Q.2. What is meant by the phrase 'teleological ethics'?

a) Is used to judge is an action is right, fair and honest.
b) An action can only be judged by its consequences.
c) Developing the individual personal characteristics.
d) The key purpose of ethics is to increase freedom.
Ans: b
Q.3. For Karl Marx, where do our values come from?
a) They are a product of our upbringing and our parents.
b) They are a product of the economic system within which we live.
c) They are a product of social inequality.
d) They are a product of what we are taught at school.
Ans: b
Q.4. What does Milton Friedman believe to be the sole responsibility of
a) The only social responsibility of business is to its shareholders.
b) Managers should act in ways that balance the interest of society and
c) The primary responsibility organizations have is to its employees.
d) The primary responsibility organizations have is to its stakeholders.
Ans: a
Q.5. What, according to Adam Smith, is the best way to promote collective
a) Through government making decisions about what is in the public interest.
b) Through everyone working together to support each other.
c) Through everyone working on their own self-interest
d) Through individuals forgoing their personal interest for the good of the
Ans: c
Q.6. Why, according to stakeholder theory, is it in companies' best interests to
pay attention to their stakeholders?
a) If firms only act in their own self-interest employees may feel exploited.

b) If firms only act in their own self-interest government might put more regulation
on them.
c) If firms only act in their own self-interest customers might not like the image
that the company portray.
d) If firms only act in their own self-interest and inflict harm on stakeholders then
society might withdraw its support.
Ans: d
Q.7. What is the enlightened self-interest model of CSR?
a) That it is in an organization's own best interest to put itself first rather than its
b) That it is in an organization's best interest to consider what a shareholder
would want.
c) That it is in an organization's own best interest to act in an ethical way.
d) That it is in an organization's own best interest to follow the legislation and
abide by the law.
Ans: c
Q.8. What is green washing?
a) Transforming products to be more ethical.
b) Making a product appear more ethical that it really is.
c) Converting the company to green production methods.
d) Convincing customers to buy ethically.
Ans: b
Q.9. What is triple bottom line?
a) An accounting tool that looks at the impact on people, planet and profits.
b) A management strategy which states all the attention should be on profits.
c) An accounting tool that looks at cost, profit and loss.
d) A management strategy which focuses on corporate social responsibility.
Ans: a
Q.10.Why do alternative organizations run differently from conventional
shareholder led approach?
a) They do not have shareholders.
b) They are run in non-hierarchical ways which aim to provide a positive impact
on society rather than to make profit.
c) They priorities corporate social responsibility.
d) They aim to give money to charities and good causes.
Ans: b
Q.11.What does and Ethical Foundation for an organisation embody?
a) The structure, operational and conduct of the activities of the organization
b) The basic principles which govern the external and internal relations of the
c) Neither of the above
d) All of these

Ans: b
Q.12.What does the importance of ethical behaviour, integrity and trust call into
a) The extent to which managers should attempt to change the underlying beliefs
and values of individual followers
b) Who does what
c) What we do next
d) None of the above
Ans: a
Q.13.A ________ _________ sets out the purpose and general direction for the
a) Mission statement
b) Purpose statement
c) Vision
d) Profit statement
Ans: a
Q.14.Which of the following would most effectively act as the primary objective
of a business organisation?
a) To make a profit
b) To procure resources
c) To communicate with shareholders
d) To mediate between the organisation and the environment
Ans: a
Q.15.What is the purpose of a balanced scorecard?
a) To measure contribution of people to business growth
b) To combine a range of qualitative and quantitative indicators of performance
c) To relate business performance to customer satisfaction
d) To relate business performance to financial measures
e) All of the above
Ans: b

Q.16.Which of the following does the term Corporate Social Responsibility

relate to?
a) Ethical conduct
b) Environmental practice
c) Community investment
d) All of the above
Ans: d
Q.17.Who are organisational stakeholders?
a) Government

b) Employees

c) Customers

d) All of the above

Ans: d
Q.18.What is Ethics to do with?
a) The wider community
c) Right and wrong
Ans: c

b) Business
d) Nothing

Q.19.Which of the following is an example of an area where business ethics

a) Conduct of international operations
b) Nowhere
c) In the personal life of staff
d) None of the above
Ans: a
Q.20.Which legislation relates to the concept of business ethics?
a) Freedom of Information Act
b) Food Act
c) Building regulations
d) All of these
Ans: a
Q.21.The four types of social responsibility include:
a) legal, philanthropic, economic, and ethical
b) ethical, moral, social, and economic
c) philanthropic, justice, economic, and ethical
d) legal, moral, ethical, and economic
Ans: a
Q.22.The ________ dimension of social responsibility refers to a business's
societal contribution of time, money, and other resources.
a) Ethical
b) Philanthropic
c) Volunteerism
d) Strategic
Ans: b
Q.23.A stakeholder orientation includes all of the following activities except:
a) generating data about stakeholder groups
b) assessing the firm's effects on stakeholder groups
c) distributing stakeholder information throughout the firm
d) minimizing the influence of stakeholder information on the firm
Ans: d
Q.24.Stakeholders are considered more important to an organization when:
a) they can make use of their power on the organization
b) they do not emphasize the urgency of their issues

c) their issues are not legitimate

d) they can express themselves articulately
Ans: a
Q.25.A (n) ________ is a problem, situation, or opportunity requiring an
individual, group, or organization to choose among several actions that
must be evaluated as right or wrong.
a) Crisis
b) ethical issue
c) indictment
d) fraud
Ans: b
Q.26.Which moral philosophy seeks the greatest good for the greatest number
of people?
a) Consequentialism
b) Utilitarianism
c) Egoism
d) Ethical formalism
Ans: b
Q.27.What type of justice exists if employees are being open, honest, and
truthful in their communications at work?
a) Procedural
b) Distributive
c) Ethical
d) Interactional
Ans: d
Q.28.A high-commitment approach to environmental issues may include all of
the following except:
a) risk analysis
b) stakeholder analysis
c) green-washing
d) strategic sustainability auditing
Ans: c
Q.29.Better access to certain markets, differentiation of products, and the sale
of pollution-control technology are ways in which better environmental
performance can:
a) increase revenue
b) increase costs
c) decrease revenue
d) decrease costs
Ans: a
Q.30.Atmospheric issues include all of the following except:
a) acid rain
b) global warming
c) air pollution
d) water quantity
Ans: d

Q.31.To be successful, business ethics training programs need to:

a) focus on personal opinions of employees.
b) be limited to upper executives.
c) educate employees on formal ethical frameworks and models of ethical
decision making.
d) promote the use of emotions in making tough ethical decisions.
Ans: c
Q.32.Most companies begin the process of establishing organizational ethics
programs by developing:
a) ethics training programs.
b) codes of conduct.
c) ethics enforcement mechanisms.
d) hidden agendas.
Ans: b
Q.33.For referent power to be effective, what must exist between individuals in
the relationship?
a) Antipathy
b) Rivalry
c) History
d) Empathy
Ans: d
Q.34.When a firm charges different prices to different groups of customers, it
may be accused of:
a) cultural relativism
b) money laundering
c) facilitating payments
d) price discrimination
Ans: a
Q.35.The ability to interpret and adapt successfully to different national,
organizational, and professional cultures is called:
a) national competitiveness.
b) global development.
c) cultural intelligence.
d) stakeholder sensitivity.
Ans: c
Q.36.Successful global initiatives addressing standards for business must
begin and end with:
a) the role of corporate governance and shareholder power in corporate decision
b) social activism
c) the implementation of standardized ethics programs.
d) the consolidation of economic and environmental efforts.

Ans: a
Q.37.The social economy partnership philosophy emphasizes:
a) cooperation and assistance.
b) profit maximization.
c) competition.
d) restricting resources and support.
Ans: a
Q.38.Which of the following is not a driver of responsible competitiveness?
a) Policy drivers
b) Development drivers
c) Business action
d) Social enablers
Ans: b
Q.39.Which of the following is a problem presented by ethics audits?
a) They may be used to reallocate resources.
b) They identify practices that need improvement.
c) Selecting auditors may be difficult.
d) They may pinpoint problems with stakeholder relationships.
Ans: c
Q.40.The first step in the auditing process should be to secure the commitment
a) employees.
b) top executives and directors.
c) stockholders.
d) customers.
Ans: b

Q.41.Codes of conduct and codes of ethics

a) are formal statements that describe what an organization expects of its
b) become necessary only after a company has been in legal trouble.
c) are designed for top executives and managers, not regular employees.
d) rarely become an effective component of the ethics and compliance program.
Ans: a
Q.42.Which of the following is NOT one of the primary elements of a strong
organizational compliance program?
a) A written code of conduct
b) An ethics officer
c) Significant financial expenditures
d) A formal ethics training program
Ans: c

Q.43.______________ are standards of behaviour that groups expect of their

a) Codes of conduct.
b) Group values.
c) Group norms.
d) Organizational norms.
Ans: c
Q.44.In a ______________ organization, decision making is delegated as far
down the chain of command as possible.
a) Decentralized
b) Creative
c) Flexible
d) Centralized
Ans: d
Q.45.____________ refers to a strategic process involving stakeholder
assessment to create long-term relationships with customers, while
maintaining, supporting, and enhancing the natural environment.
a) Eco-strategy
b) Green marketing
c) Superfund reauthorization
d) Recycle and reprocess management
Ans: b
Q.46.The hand-of-government refers to the
a) ability of the government to interfere in business negotiations
b) role of corporations to be profitable within the law
c) effect of national politics on business decisions
d) impact of changing government regulations
Ans: b
Q.47.An organisation's obligation to act to protect and improve society's
welfare as well as its own interests is referred to as
a) organisational social responsibility
b) organisational social responsiveness
c) corporate obligation
d) business ethics
Ans: a
Q.48.The view that business exists at society's pleasure and businesses should
meet public expectations of social responsibility is the
a) iron law of responsibility argument
b) enlightened self-interest argument
c) capacity argument
d) anti-freeloader argument
Ans: b
Q.49.Managerial ethics can be characterised by all of the following levels except
a) immoral management
b) amoral management

c) demoral management

d) moral management

Ans: c
Q.50. Which of the following is not one the underlying principles of the
corporate governance Combined Code of Practice?
a) Openness
b) Integrity
c) Accountability
d) acceptability
Ans: d
Q.51. External audit of the accounts of a limited company is required
a) because it is demanded by the companys bankers
b) by the Companies Act 2006
c) at the discretion of the shareholders
d) to detect fraud
Ans: b
Q.52. Directors responsibilities are unlikely to include.
a) a fiduciary duty
b) a duty to keep proper accounting records
c) a duty to propose high dividends for shareholders
d) a duty of care
Ans: c
Q.53. A company may become insolvent if it
a) has negative working capital
b) cannot meet its budgeted level of profit
c) makes a loss
d) cannot pay creditors in full after realisation of its assets
Ans: d
Q.54. A director of a limited company may not be liable for wrongful trading if he
or she
a) took every step to minimise the potential loss to creditors
b) increased the valuation of its inventories to cover any potential shortfall
c) introduced into the balance sheet an asset based on a valuation of its brands
sufficient to meet any shortfall
d) brought in some expected sales from next year into the current year
Ans: a
Q.55. Fraudulent trading may be
a) a civil offence committed by any employee
b) a criminal offence committed only by directors of a limited company
c) a civil and a criminal offence committed only by directors of a limited

d) a civil and a criminal offence committed by any employee

Ans: d
Q.56. Disqualification of directors may result from breaches under the
a) Sale of Goods Act 1979
b) Financial Services Act 1986
c) Companies Act 2006 and Insolvency Act 1986
d) Health and Safety at Work Act 1974
Ans: c
Q.57. Directors may not be disqualified for
a) continuing to trade when the company is insolvent
b) persistent breaches of company legislation
c) paying inadequate attention to the company finances
d) being convicted of drunken driving
Ans: d

Q.58. Which of the following actions will not help directors to protect
with their
a) keeping themselves fully informed about company affairs
b) ensuring that regular management accounts are prepared by the company
c) seeking professional help
d) including a disclaimer clause in their service contracts
Ans: d
Q.59. Co-ording to Cadbury (2002), corporate governance is an issue of power
a) Rights
b) Accountability
c) Profit
d) Appropriability
Ans: b
Q.60. The OECD argues that corporate governance problems arise because:
a) Ownership and control is separated
b) Managers always act in their own self interest
c) Profit maximization is the main objective of organizations
d) Stakeholders have differing levels of power
Ans: a

Q.61. The Institute of Chartered Accountants in England and Wales considers

argue that one particular stakeholder group should have primacy over all
other groups. Which stakeholder group are they referring to?
a) Customers
b) Managers
c) Shareholders
d) Society
Ans: c
Q.62. An organization that is owned by shareholders but managed by agents on
their behalf is conventionally known as the modern:
a) Conglomerate
b) Corporation
c) Company
d) Firm
Ans: b
Q.63. The modern corporation has four characteristics. These are limited
liability, legal personality, centralized management and:
a) Fiduciary duty
b) Stakeholders
c) Shareholders
d) Transferability
Ans: d

Q.64. What makes a corporation distinct from a partnership?

a) If the members of a corporation die, the corporation remains in existence
providing it has capital
b) If the members of a corporation die, the corporation ceases to exist
c) A corporation cannot own property
d) A corporation cannot be held responsible for the illegal acts of its employees
Ans: a
Q.65. The term 'asymmetry of information' means information in a corporation
a) Transferable to all stakeholders
b) Not transferable to all stakeholders
c) Not equally transparent to all stakeholders
d) Equally transparent to all stakeholders
Ans: c
Q.66. The view that sees profit maximization as the main objective is known as:
a) Shareholder theory
b) Principal-agent problem
c) Stakeholder theory
d) Corporation theory
Ans: c

Q.67. Where an organization takes into account the effect its strategic decisions
have on society, this is known as:
a) Corporate governance
b) Business policy
c) Business ethics
d) Corporate social responsibility
Ans: d
Q.68. Which intervention resulted from the Enron scandal?
a) The Hampel Committee
b) The Sarbannes-Oxley Act
c) The Greenbury Committee
d) The Cadbury Committee
Ans: b
Q.69. Executive pay in the UK was reviewed by:
a) The Greenbury Committee
b) The Hampel Committee
c) The Cadbury Committee
d) The Higgs Committee
Ans: a
Q.70. In Japan, some corporations operate within the philosophy of 'kyosei'. The
term 'kyosei' means:
a) No man shall be richer than another man
b) All stakeholders are equal
c) Living and working for the common good
d) If the corporation is bad, society is bad
Ans: c
Q.71. When managerial self-dealings are excessive and left unchecked,
a) they can have serious negative effects on share values
b) they can impede the proper functions of capital markets.
c) they can impede such measures as GDP growth.
d) all of the above
Ans: d
Q.72. Corporate governance structure
a) varies a great deal across countries.
b) has become homogenized following the integration of capital markets.
c) has become homogenized due to cross-listing of shares of many public
d) none of the above
Ans: a

Q.73. In a public company with diffused ownership, the board of directors is

entrusted with
a) monitoring the auditors and safeguarding the interests of shareholders.
b) monitoring the shareholders and safeguarding the interests of management.
c) monitoring the management and safeguarding the interests of shareholders.
d) none of the above
Ans: c
Q.74. The key weakness of the public corporation is
a) too many shareholders, which makes it difficult to make corporate decision.
b) relatively high corporate income tax rates.
c) conflicts of interest between managers and shareholders.
d) conflicts of interests between shareholders and bondholders.
Ans: c

Q.75. When company ownership is diffuse,

a) a "free rider" problem discourages shareholder activism.
b) the large number of shareholders ensures strong monitoring of managerial
behavior because with a large enough group, there's almost always
someone who will to incur the costs of monitoring management.
c) few shareholders have a strong enough incentive to incur the costs of
monitoring management.
d) both a) and c) are correct
Ans: d
Q.76. In many countries with concentrated ownership
a) the conflicts of interest between shareholders and managers are worse than
in countries with diffuse ownership of firms.
b) the conflicts of interest are greater between large controlling shareholders
and small outside shareholders than between managers and shareholders.
c) the conflicts of interest are greater between managers and shareholders
than between large controlling shareholders and small outside shareholders.
d) corporate forms of business organization with concentrated ownership are
Ans: b
Q.77. In what country do the three largest shareholders control, on average,
about 60 percent of the shares of a public company?
a) United States
b) Canada
c) Great Britain
d) Italy

Ans: d
Q.78. The public corporation
a) is jointly owned by a (potentially) large number of shareholders.
b) offers shareholders limited liability.
c) separates the ownership and control of a firm's assets.
d) all of the above
Ans: d
Q.79. Periodic ethics audits
a) Are required by the Indian stock exchange
b) A method of fostering ethics
c) A method of quantitative assessment
d) Always use external consultants
Ans: b
Q.80. Political intrusion into business
a) May be desirable in some circumstances
b) Is anathema
c) Politics should have no say in how business is conducted
d) state legislation over-rides Federal Legislation
Ans: a
Q.81. The reach of codes is
a) Restricted to those obliged to conform by virtue of membership
b) Applicable to all
c) Applicable to the public only
d) the same as the reach of the law
Ans: a
Q.82. East India Company
a) Was always a management agency for the British government
b) had a continuous trade monopoly until 1873
c) Went out of existence at the time of Indian independence
d) Largely set commercial and management practices for India
Ans: d
Q.83. Quantification in ethics may be done by
a) Putting monetary value on prospective actions
b) Comparing the value of one action with another
c) Both A and B
d) Neither A or B
Ans: c

Q.84. When communicating a code of conduct

a) Focus on values that should guide decision making
b) Provide the same code of conduct to all departments regardless of its length.
c) Refrain from changing the code of conduct regularly
d) Fewer employees will read the code if it is short
Ans: a
Q.85. The __________ approach to formal corporate ethics initiatives is
proactive and inspirational.
a) Rules
b) Compliance
c) Principles
d) Values
Ans: d
Q.86. The _________ approach to formal corporate ethics initiatives focuses on
meeting required behavior norms or obeying the letter of the law
a) Rules
b) Compliance
c) Principles
d) Values
Ans: b
Q.87. Which of the following is associated with the classical view of social
a) economist Robert Reich
b) concern for social welfare
c) stockholder financial return
d) voluntary activities
Ans: c
Q.88. How many stages are in the model of an organization social responsibility
a) 3
b) 4
c) 5
d) 6
Ans: b
Q.89. The belief that a firm pursuit of social goals would give them too much
power is known as what argument in opposition to a firm being socially
a) Costs
b) lack of skills
c) lack of broad public support
d) too much power
Ans: d
Q.90. Social obligation is the obligation of a business to meet its
a) social and technological responsibilities
b) economic and legal responsibilities
c) technological and economic responsibilities

d) economic and social responsibilities

Ans: b
Q.91. Under
a) does what it can to meet the law, and a little bit more for stakeholders
b) fulfills its obligation to the stakeholders, which makes it fulfill the law, too
c) does the minimum required by law
d) fulfills its obligation to the law and its stakeholders
Ans: c
Q.92. Social responsiveness refers to the capacity of a firm to adapt to changing
a) societal conditions
b) organizational conditions
c) societal leaders
d) organizational managers
Ans: a
Q.93. Applying social criteria to an
a) socioeconomic view
c) social responsibility
Ans: d





b) social responsiveness
d) social screening

Q.94. Which of the following is a basic definition of ethics?

a) moral guidelines for behavior
b) rules for acknowledging the spirit of the law
c) rules or principles that define right and wrong conduct
d) principles for legal and moral development
Ans: c
Q.95. Reasoning at the ______________ level of moral development indicates
that moral values reside in maintaining the conventional order and the
expectations of others.
a) Preconventional
b) Conventional
c) Principled
d) arrival
Ans: b
Q.96. A personality measure of persons convictions is _______________.
a) moral development
b) ego strength
c) locus of control
d) social desirability
Ans: b
Q.97. Which of the following organizational structural characteristics would
most likely result in managerial ethical behavior?
a) few job descriptions
b) formal rules
c) mixed messages from authority figures
d) All of these

Ans: b
Q.98. Global organizations must __________ their ethical guidelines so that
employees know what is expected of them while working in a foreign
a) Clarify
b) Provide
c) Establish
d) broaden
Ans: a
Q.99. _____________ is a document that outlines principles for doing business
globally in the areas of human rights, labor, the environment, and
a) A code of ethics
b) The Global Compact
c) The Foreign Corrupt Practices Act
d) Global Ethics
Ans: b
Q.100. A _____________ is a formal statement of an organization primary values
and the ethical rules it expects its employees to follow
a) mission statement
b) statement of purpose
c) code of ethics
d) vision statement
Ans: c