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

  1. organisational social responsibility
  2. organisational social responsiveness
  3. corporate obligation
  4. business ethics

Correct answer: (A)
organisational social responsibility

12. An organization’s appropriate tone at the top promoting ethical conduct is an example of:

  1. Ethics sensitivity.
  2. Ethics incentives.
  3. Ethical behavior.
  4. Consequentialist.

Correct answer: (C)
Ethical behavior.

13. Atmospheric issues include all of the following except:

  1. acid rain
  2. global warming
  3. air pollution
  4. water quantity

Correct answer: (D)
water quantity

14. Which of the following regarding residual loss is correct?

  1. Bonding costs do not have an effect on residual loss.
  2. Residual loss is incurred by the agent because an agency relationship exists.
  3. Under agency theory, residual loss can be reduced to zero by good governance.
  4. 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:

  1. increase revenue
  2. increase costs
  3. decrease revenue
  4. decrease costs

Correct answer: (A)
increase revenue

16. Which of the following regarding corporate governance is correct?

  1. Corporate governance can temper growth.
  2. Good corporate governance can result in excessive risk-taking.
  3. Corporate governance often result in prompt and effective decision-making.
  4. 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

  1. are formal statements that describe what an organization expects of its employees.
  2. become necessary only after a company has been in legal trouble.
  3. are designed for top executives and managers, not regular employees.
  4. 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?

  1. The nomination and risk committees.
  2. The audit and remuneration committees.
  3. The remuneration, audit, risk and nomination committees.
  4. 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

  1. because it is demanded by the company’s bankers
  2. by the Companies Act 2006
  3. at the discretion of the shareholders
  4. 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?

  1. Antipathy
  2. Rivalry
  3. History
  4. Empathy

Correct answer: (D)
Empathy

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