BBM Business Ethics and Corporate Governance 3

Question 1

What is the primary purpose of an independent audit committee within a corporation's board?

Accepted Answer

To oversee the financial reporting process and ensure integrity of financial statements

Answer

An audit committee oversees financial reporting, internal controls, and the external audit process to ensure the accuracy and integrity of a company's financial statements.

Question 2

Which of the following best describes 'moral relativism' in business ethics?

Accepted Answer

The view that ethical judgments are not absolute but depend on cultural or individual context

Answer

Moral relativism holds that ethical standards are not universal but are shaped by cultural, historical, or personal contexts, meaning what is ethical may vary across societies.

Question 3

The principal-agent problem in corporate governance arises when:

Accepted Answer

Managers (agents) pursue their own interests at the expense of shareholders (principals)

Answer

The principal-agent problem occurs when managers, acting as agents for shareholders, make decisions that benefit themselves rather than maximizing shareholder value.

Question 4

According to the Foreign Corrupt Practices Act (FCPA), U.S. companies are prohibited from:

Accepted Answer

Bribing foreign government officials to obtain or retain business

Answer

The FCPA prohibits U.S. companies and individuals from bribing foreign government officials to gain a business advantage, and requires accurate record-keeping of transactions.

Question 5

Which ethical concept refers to a company's obligation to treat all employees, customers, and stakeholders without discrimination?

Accepted Answer

Organizational fairness

Answer

Organizational fairness requires that companies apply consistent and equitable treatment to all individuals regardless of characteristics like race, gender, or age, both legally and ethically.

BBM - Business Management Degree Practice Test

BBM - Business Management Degree Practice Test

BBM Business Ethics and Corporate Governance 3