University of Dayton

PHL 313

CHAPTER 14

Multiple-Choice Questions

1)Actions that raise the question of for whom the corporation is to be managed include:

1. 1. Maximizing profits
   2. Philanthropy
   3. Rejecting premiums offered in hostile takeovers
   4. All of the above

2. McCall argues that employee participation rights can be derived from modern Western moral norms that profess a commitment to the                                                                              of each person.
   1. right to work
   2. right to property
   3. equal dignity
   4. simple duty

3. Nader, Green, and Seligman argue that in nearly every large U.S. business corporation, there exists a management:
   1. Democracy
   2. Vacuum
   3. Autocracy
   4. That is demonstrably excellent

4. Dunfee claims that the normative justification for respecting marketplace morality, which requires managers to identify and act consistently with legitimate ethical norms found in the communities in which their firms operate, relies upon a:
   1. Hypothetical social contract
   2. High-pressure social contract
   3. Trust-based fiduciary relationship
   4. Monotonic position

5. McCall writes that “it is now a psychological commonplace” that “institutional relationships” largely condition our:
   1. Work
   2. Religion
   3. Self-worth
   4. Social competence

6. McCall argues that the right to codetermine corporate policy should belong to:
   1. Boards of directors
   2. Only shareholders
   3. Only managers
   4. Employees

7. Cohen believes that most CEOs want large compensation packages because:
   1. They are greedy.
   2. These packages represent a measure of their success.
   3. They’ve earned it.
   4. To whom else would the money go?

8. In his advice to auditors, Warren Buffett asks: Is the company following the same internal audit procedure that the auditor would if he himself were:
   1. CEO
   2. An employee
   3. On the board
   4. A shareholder

9. A deep tension central to this chapter is between the powers of:
   1. Society and morality
   2. Boards of directors and CEOs
   3. Philosophers and economists
   4. Auditors and accountants

10. Nader, Green, and Seligman argue that only the board should make decisions about salary, expense, and benefit schedules because, for executives, these present:
    1. Conflicts of interest
    2. Incentives
    3. Rewards
    4. Costs

11. Disagreement between a board of directors and a CEO is:
    1. Sometimes a good thing
    2. Always to be encouraged
    3. Always a bad thing
    4. Always to be avoided

12. Nader, Green, and Seligman argue that the shareholder electoral process should be made more:
    1. Autocratic
    2. Aristocratic
    3. Oligarchic
    4. Democratic

13. Shapiro believes that the board of directors should:
    1. Be selected by the company officers
    2. Try to maintain harmony with the CEO
    3. Determine the broad policies of the company
    4. Be eliminated from the corporate system

14. An example of market morality is:

1. 1. Refusing to buy from someone because his or her prices are too high
   2. Refusing to buy from someone because the product doesn’t meet your needs
   3. Preferring to buy from someone who is your friend
   4. Preferring to buy from someone who doesn’t outsource jobs from the United States

15. According to Shapiro, two of the checks on corporate behavior are:
    1. Government and religion
    2. Government and competition
    3. Competition and morality
    4. Morality and the law

True/False Questions

1.                                                         Nader, Green, and Seligman point out that the key to management’s hegemony over a corporation is money.

2.                                                         Shapiro thinks that corporate boards are already changing for the better.

3.                                                         Dunfee believes that there is a presumption that all corporate actions must be undertaken to maximize shareholder wealth.

4.                                                         McCall argues that “rank-and-file” employees have no place in governing corporations.

5.                                                         Nader, Green, and Seligman argue that an effective board will tend to reduce the “harmony” of executive management.

6.                                                         It is here shown that in general, Americans think that government should be doing more to regulate businesses’ accounting practices.

7.                                                         Among other things, Fraser of Birkenstock is here offered as a model of how a corporate owner might want to share governance (and eventually ownership) with her employees, but not necessarily with the company’s shareholders.

8.                                                         The core of the monotonic approach is to maximize shareholder wealth.

9.                                                         Shapiro argues that change in the structure of corporate boards should be swift and dramatic rather than gradual.

10.                                                         Nader, Green, and Seligman argue that the modern corporation is like a political state in which all powers are held by a single clique.

Fill-in-the-Blank Questions

1. Nader and his co-authors argue for

revamping corporations to                                the responsibility and accountability of boards of directors.

2. Nader, Green, and Seligman offer concrete

guidelines for how                                                ought to be run.

3. Shapiro argues that                               are/is in

fact improving, and that this process should continue gradually.

4.

approach for business.

                            outlines a marketplace morality

5. McCall offers a robust defense of

                                    participation rights in corporate governance.

6.                             insist(s) that boards of directors

must have sufficient time to dedicate to the job and they must be part of a good, well- organized structure.

7. The main objection that McCall considers to

his argument is based on the                                                of corporate owners.

8. Reisner’s article raises a concern that

                            may become demoralized and quit if compensation packages are cut.

9. The                                   view emphasizes

maximization of shareholder wealth.

10. Kant’s view is that we should act only on a

maxim that we would want to become a universal                               .