CEA Stakeholder Rights & Responsibilities 3 — Questions and Answers
Question 1: A corporation's board decides to close a factory, displacing 500 workers, without prior consultation. Which stakeholder right is most directly violated?
- Right to financial compensation
- Right to be informed and consulted on significant decisions (Correct answer)
- Right to veto corporate decisions
- Right to profit-sharing
Correct answer: Right to be informed and consulted on significant decisions
Employees have a right to be informed and consulted on major decisions that materially affect their livelihoods.
Question 2: Environmental groups argue they have stakeholder status even though they have no financial relationship with a company. This claim is based on:
- Contractual rights
- Moral stakeholder theory, recognizing interests beyond economic relationships (Correct answer)
- Shareholder derivative actions
- Regulatory mandates only
Correct answer: Moral stakeholder theory, recognizing interests beyond economic relationships
Moral stakeholder theory expands the stakeholder concept to include groups affected by corporate actions even without a direct economic relationship.
Question 3: Which stakeholder responsibility do investors bear toward the companies in which they invest?
- No responsibility beyond compliance with securities law
- Active stewardship, including engagement on ESG and governance matters (Correct answer)
- Guaranteeing company profitability
- Limiting executive compensation decisions
Correct answer: Active stewardship, including engagement on ESG and governance matters
Responsible investment principles require investors to actively engage with companies on governance, environmental, and social issues — not just monitor returns.
Question 4: A pharmaceutical company prices a life-saving drug so high that low-income patients cannot afford it. Which stakeholder ethical principle is at issue?
- Non-maleficence and equitable access (Correct answer)
- Competitive pricing rights
- Intellectual property protection
- Consumer choice autonomy
Correct answer: Non-maleficence and equitable access
Non-maleficence and the obligation of equitable access are violated when pricing systematically excludes vulnerable populations from essential medicine.
Question 5: Corporate transparency reports that disclose environmental and social performance data are primarily intended to serve which stakeholder function?
- Limit legal liability
- Enable informed stakeholder decision-making and accountability (Correct answer)
- Satisfy internal audit requirements
- Reduce corporate tax obligations
Correct answer: Enable informed stakeholder decision-making and accountability
Transparency reporting supports stakeholder rights by providing the information needed for accountability and informed engagement.
Question 6: Which scenario best illustrates a company fulfilling its responsibility to future generations as stakeholders?
- Increasing dividends paid to current shareholders
- Investing in renewable energy to reduce long-term environmental impact (Correct answer)
- Expanding current product lines to meet immediate demand
- Reducing workforce to improve quarterly earnings
Correct answer: Investing in renewable energy to reduce long-term environmental impact
Investing in sustainable practices directly addresses the interests of future generations who will inherit the environmental consequences of today's decisions.
Question 7: When a non-governmental organization (NGO) campaigns against a company's labor practices, which stakeholder mechanism is it exercising?
- Legal injunction
- Shareholder derivative suit
- Voice and reputational pressure as a secondary stakeholder (Correct answer)
- Direct bargaining rights
Correct answer: Voice and reputational pressure as a secondary stakeholder
NGOs exercise influence as secondary stakeholders through advocacy, public pressure, and reputational mechanisms rather than formal legal rights.
CEA Stakeholder Rights & Responsibilities 3
A corporation's board decides to close a factory, displacing 500 workers, without prior consultation.
Which stakeholder right is most directly violated?