Corporate Governance And Ethics 2

Question 1

Which ethical theory holds that the morality of an action is determined solely by its consequences or outcomes?

Accepted Answer

Consequentialism

Answer

Consequentialism judges actions based on their outcomes, with utilitarianism being its most common corporate application.

Question 2

A company's code of ethics is MOST effective when it is:

Accepted Answer

Embedded in hiring, training, and performance evaluations

Answer

Codes of ethics gain real effectiveness when integrated into organizational processes like hiring, training, and performance reviews rather than existing as standalone documents.

Question 3

The 'business judgment rule' protects directors who make decisions that later prove harmful if the directors:

Accepted Answer

Acted in good faith with adequate information and no conflict of interest

Answer

The business judgment rule shields directors from liability when they act in good faith, on an informed basis, and without personal financial interest in the outcome.

Question 4

Which governance mechanism is MOST directly responsible for setting executive compensation?

Accepted Answer

Compensation committee

Answer

The compensation committee, typically composed of independent directors, is responsible for designing and approving executive pay packages.

Question 5

An ethics hotline (whistleblower line) is PRIMARILY intended to:

Accepted Answer

Allow employees to report misconduct anonymously without fear of retaliation

Answer

Ethics hotlines provide a confidential channel for employees to report suspected violations of law or policy without risk of retaliation.

Corporate Governance Practice Test

Corporate Governance Practice Test

Corporate Governance And Ethics 2