UExcel Business Ethics 2 — Questions and Answers
Question 1: The Sarbanes-Oxley Act (SOX) was enacted primarily to:
- Regulate international trade agreements
- Increase corporate accountability and protect investors from accounting fraud (Correct answer)
- Set minimum wage standards for corporations
- Establish environmental reporting requirements
Correct answer: Increase corporate accountability and protect investors from accounting fraud
SOX was passed in 2002 following accounting scandals at Enron and WorldCom to improve corporate governance and financial transparency.
Question 2: What does stakeholder theory argue?
- Companies should focus solely on shareholder returns
- Companies have obligations to all parties affected by their operations, not just shareholders (Correct answer)
- Only government entities can hold corporations accountable
- Profits are the only measure of business success
Correct answer: Companies have obligations to all parties affected by their operations, not just shareholders
Stakeholder theory holds that businesses should consider the interests of all stakeholders — employees, customers, communities, and shareholders.
Question 3: Which term describes the practice of making misleading environmental claims to appear more eco-friendly?
- Bluewashing
- Greenwashing (Correct answer)
- Whitewashing
- Pinkwashing
Correct answer: Greenwashing
Greenwashing involves companies making false or exaggerated claims about environmental friendliness to attract environmentally conscious consumers.
Question 4: Insider trading is illegal because it:
- Reduces stock market volatility
- Gives unfair advantage to those with non-public information, undermining market integrity (Correct answer)
- Violates international trade agreements
- Increases transaction costs for all investors
Correct answer: Gives unfair advantage to those with non-public information, undermining market integrity
Insider trading violates securities laws because it allows individuals with privileged non-public information to profit unfairly at others' expense.
Question 5: What is the 'triple bottom line' in sustainable business practice?
- Revenue, operating income, and net profit
- People, planet, and profit (Correct answer)
- Short-term, medium-term, and long-term profits
- Local, national, and international revenue streams
Correct answer: People, planet, and profit
The triple bottom line framework measures business performance across social (people), environmental (planet), and financial (profit) dimensions.
Question 6: A bribe differs from a legitimate business gift because:
- Gifts are tax-deductible while bribes are not
- A bribe is intended to improperly influence a business decision (Correct answer)
- Gifts must be disclosed to the government
- Bribes can only occur in foreign countries
Correct answer: A bribe is intended to improperly influence a business decision
A bribe is given to corruptly influence someone's decisions or actions, making it illegal and unethical, unlike a genuine goodwill gift.
UExcel Business Ethics 2
The Sarbanes-Oxley Act (SOX) was enacted primarily to: