Business Ethics and Governance

1. Which of the following is not a driver of responsible competitiveness?

  1. Policy drivers
  2. Development drivers
  3. Business action
  4. Social enablers

Correct answer: (B)
Development drivers

2. Which of the following statements regarding institutional shareholders is correct?

  1. These shareholders have extensive power to monitor the activities of the company.
  2. Institutional shareholders prefer to exert their power privately rather than publicly.
  3. These shareholders often aim to improve outcomes rather than sell their shareholding.
  4. Institutional shareholders are known to publicly use their voting power to encourage sound corporate governance.

Correct answer: (B)
Institutional shareholders prefer to exert their power privately rather than publicly.

3. 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.

  1. Crisis
  2. ethical issue
  3. indictment
  4. fraud

Correct answer: (B)
ethical issue

4. A board that is elected in a classified system is known as a:

  1. Diversified board.
  2. Staggered board.
  3. Rotating board.
  4. Declassified board.

Correct answer: (A)
Diversified board.

5. A high-commitment approach to environmental issues may include all of the following except:

  1. risk analysis
  2. stakeholder analysis
  3. green-washing
  4. strategic sustainability auditing

Correct answer: (C)
green-washing

6. Which of the following relating to discounting future liabilities is correct?

  1. Discounting future cash flows is not aligned with the aims and objectives of sustainability reporting.
  2. Discounting distant future costs that are to be incurred increases the current liability that is to be reported now.
  3. Discounting costs highlights the savings of future generations due to present generations accounting for the loss now.
  4. Discounting social issues are done in terms of the accounting standards so there are no ethical issues as the process is fair.

Correct answer: (A)
Discounting future cash flows is not aligned with the aims and objectives of sustainability reporting.

7. Which of the following relating to CSR theories is correct?

  1. Institutional theory is based on the shareholder concept.
  2. Social contract is the key concept of legitimacy theory.
  3. The key concept of enlightened self-interest is stakeholder relations.
  4. Stakeholder theory requires organisations to manage community perceptions to survive.

Correct answer: (B)
Social contract is the key concept of legitimacy theory.

8. A stakeholder orientation includes all of the following activities except:

  1. generating data about stakeholder groups
  2. assessing the firm's effects on stakeholder groups
  3. distributing stakeholder information throughout the firm
  4. minimizing the influence of stakeholder information on the firm

Correct answer: (D)
minimizing the influence of stakeholder information on the firm

9. ABC Ltd is a mining company listed on the Australia stock exchange. It has an audit committee comprising four members. Two members are independent non-executive directors with engineering and mining qualifications. The nomination committee is currently looking to appoint an additional member to the audit committee. In terms of the ASX principles, which of the following would most likely be the best candidate for appointment?

  1. An independent non-executive director with a qualification in finance.
  2. An executive director with a qualification in accounting.
  3. A non-independent non-executive director with qualifications in accounting and auditing.
  4. A non-executive director who was previously the CFO of ABC Ltd a year ago.

Correct answer: (A)
An independent non-executive director with a qualification in finance.

10. An independent director is one who:

  1. Did not attend a school supported by the company.
  2. Does not have outside relationships with other directors.
  3. Does not have any other relationships with the company other than his or her directorship.
  4. All of the above.

Correct answer: (C)
Does not have any other relationships with the company other than his or her directorship.

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