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- 1. Multiple Choice
Which three of the following attributes are identified by the Institute of Business Ethics as being typical of ethical business leaders?
Fair mindedness
Honesty
Ability to listen
Empathy
Accountability
- 2. Multiple Choice
In a market-based financial system, the financial system will be characterised by
comparatively more government regulation than a bank-based system
comparatively less close relationships between banks and businesses than in a bank-based system
comparatively more risk averse households than in a bank-based system
households with less access to investment in physical assets than in a bank-based system
- 3. Multiple Choice
In the country of Zanadu, the population has a risk seeking attitude towards financial matters. Zanadu's financial system is likely to be
a market-based system
a stakeholder system
a bank-based system
a public policy system
- 4. Multiple Choice
Under a unitary board structure, a company's board of directors is responsible for both management of the business and reporting to
the non-executive directors
the supervisory board
the company's employees
the company's shareholders
- 5. Multiple Choice
In both bank-based and market-based financial systems, financial intermediation is of increased importance because of its ability to address the market imperfection of
monopoly
asymmetric information
trade barriers
tariffs and quotas
- 6. Multiple Choice
The agency problem is behind the need for sound corporate governance. The 'principal' in this agency relationship is
customers as a body
shareholders as a body
managers as a body
directors as a body
- 7. Multiple Choice
A consultant has made the following statements, which he maintains are drawn from the definition of corporate governance in the OECD's Principles of Corporate Governance.
Statement 1
Corporate governance comprises the practices and procedures for ensuring that a company is run in such a way that it achieves its objectives
Statement 2 Corporate governance is a set of relationships between a company's management, its board, its shareholders and other stakeholders
Do these statements match the definition?
Statement 1: Yes, matches. Statement 2 : No, does not match
Statement 1: No, does not match Statement 2: Yes, matches
Statement 1: Yes, matches Statement 2: Yes, matches
Statement 1: No, does not match Statement 2 : No, does not match
- 8. Multiple Choice
Different corporate governance systems reflect different ways in which companies are managed and controlled by different board structures. The following statements have been made about the structure of a board of directors.
Statement 1 In the UK and Germany there is a unitary board system
Statement 2 A two-tier system comprises a management board and a supervisory board
Are these statements true or false?
Statement 1 True , Statement 2 False
Statement 1 False , Statement 2 True
Statement 1True , Statement 2 True
Statement 1False , Statement 2 False
- 9. Multiple Choice
Which of the following is one of the five OECD Principles of Corporate Governance?
Promote transparent and fair financial reporting
Support the rights of stakeholders
Treat major shareholders equitably
Ensure real time, accurate disclosure and transparency
- 10. Multiple Choice
The following statements have been made about ethical audits and corporate responsibility.
Statement 1 An ethical audit is a process which measures both the internal and external consistency of a company's values base
Statement 2 How far an organisation protects stakeholders with which it has contractual relationships is a measure of its corporate responsibility
Are these statements true or false?
Statement 1 True Statement 2 False
Statement 1 False Statement 2 True
Statement 1 True Statement 2 True
Statement 1 False Statement 2 False
- 11. Multiple Choice
The principal factor affecting the nature of business ethics over time is
the expectations of society
the values of senior management
company policies
government regulation
- 12. Multiple Choice
A financial system comprises which three of the following?
Governance structures
Intermediaries
Securities
Markets
Regulators
- 13. Multiple Choice
The ability of markets to allocate resources efficiently within a financial system is often restricted by market imperfections.
Which three of the following are market imperfections associated with financial markets?
Lack of codes of practice
Information asymmetry
Transaction costs
Lack of regulation
Insider dealing
- 14. Multiple Choice
The body responsible for promoting high standards of corporate governance in the UK is the
FRC
OECD
CCAB
Bank of England
- 15. Multiple Choice
Woolmer plc adopts corporate responsibility as a key element in its strategies. This will mean that the company seeks to
meet the minimum obligations it owes to stakeholders
exceed the minimum obligations it owes to stakeholders
meet the minimum obligations it owes to shareholders
exceed the minimum obligations it owes to shareholders
- 16. Multiple Choice
In seeking to address the problem of the separation of ownership and control, corporate governance attempts to align the interests of which two of the following stakeholders?
Investors
Employees
Regulators
Managers
Auditors
- 17. Multiple Choice
The stewardship approach to corporate governance requires directors of limited companies
to act at all times in the best interests of the company
to allow shareholders to see detailed accounting records on request
to hold regular monthly meetings to answer shareholders' questions
to consult the shareholders over difficult management decisions
- 18. Multiple Choice
The board of directors of Lake plc is concerned that the current Chief Executive's actions are undermining the ethical culture at the company. She fails to listen to the concerns of managers about unfair treatment of suppliers, and she has failed to learn from a recent scandal in which the company was fined for data protection breaches.
To improve the ethical culture at Lake plc, which of the following is the most important action for the board to take?
Draft a code of business ethics for Lake plc's employees
Rewrite Lake plc's policies regarding suppliers and customers
Demonstrate leadership by encouraging Lake plc's Chief Executive to be more open
Brief shareholders more fully about Lake plc's incentive scheme for managers
- 19. Multiple Choice
Protea plc manufactures sporting equipment for leisure centres. The Chairman is Jonathan Potter, and the Chief Executive is his daughter Elise. All of the directors receive bonuses based on annual profits. The company's sales are made by individual salespeople who routinely bypass the company's strict credit check procedures. A number of irrecoverable debts have arisen in the current year that would have affected profitability and the share price, if the Finance Director had not manipulated the accounts.
From this information, what are the likely corporate governance issues at Protea plc?
Domination by a small group
Emphasis on short-term profitability
Lack of supervision of employees
All of the above
- 20. Multiple Choice
Which of the following is a list of the key elements of good corporate governance?
Board of directors, senior management, employees, external auditors, external auditors
Senior management, shareholder, employee, external auditors, lenders
Board of directors, senior management, shareholders, external auditors, internal auditors
Senior management, stakeholder, internal auditors, employees, government regulators
- 21. Multiple Choice
Ultra Zeta AG is a company based in Germany. The business has a dual board structure for its Board of Directors
Which of the following types of board forms part of the company's board structure?
Unitary board
Supervisory board
Non-executive board
Executive board
- 22. Multiple Choice
The national culture in the country of Erewhon is characterised by a high ‘power distance’ score, and an acceptance that power is distributed unequally, and concentrated in the hands of a small number of key individuals.
By contrast, the country of Wenland has a lower ‘power distance’ score, and people strive to get power distributed more evenly.
Based on the ‘power distance’ scores of the two countries, identify if each of the following statements is likely to be true or false.
1 The corporate governance code in Erewhon prohibits the role of CEO and chair being combined, but the code in Wenland permits this.
2 The corporate governance code in Wenland requires a higher proportion of independent NEDs on the board than the code in Erewhon does.
Statement 1 = True; Statement 2 = True
Statement 1 = True; Statement 2 = False
Statement 1 = False; Statement 2 = True
Statement 1 = False; Statement 2 = False
- 23. Multiple Choice
Which of the following statements about whistle-blowing is/are true?
1 Whistle-blowing involves the disclosure by an employee of illegal or unethical behaviour in the workplace.
2 Employees should always report concerns about unethical behaviour to their line manager in the first instance.
Neither of them
1 only
2 only
Both of them
- 24. Multiple Choice
Which three of the following are core aspects of South Africa’s King Report?
Good corporate citizenship
Equality
Leadership
Sustainability
Responsibility
- 25. Multiple Choice
Goldenwood plc is a multinational company that makes sweets and sugary drinks targeted at children between the ages of 4 and 8 years old. The company regularly advertises its products during prime time children’s television programmes and on popular YouTube channels with high numbers of child subscribers. In recent weeks, the company has received adverse publicity because of its targeting of young children which has been branded as ‘unethical’.
Which business function is impacted by this ethical issue?
Operations
Procurement
Human Resources
Marketing
- 26. Multiple Choice
The agency problem concerns the misalignment in interests and conflicts of interest between:
banks and financial markets
regulators and professional bodies
government and industry
directors and shareholders
- 27. Multiple Choice
In a company with weak corporate governance managers may be able primarily to pursue their own rather than the company's interests because, in relation to shareholders:
they have more information and high levels of accountability
they have less information and high levels of accountability
they have more information and low levels of accountability
they have less information and low levels of accountability
- 28. Multiple Choice
In comparison with the corporate and the public policy perspectives on corporate governance, the stakeholder perspective places least emphasis on:
accountability
alignment of interests of shareholders and other stakeholders
good information
efficient use of resources
- 29. Multiple Choice
Good practice in corporate governance requires that openness and transparency should be supported by:
reducing the potential for conflicts of interest
disclosure of information
reconciling the interests of shareholders and directors
judging performance of directors on the basis of return on investment
- 30. Multiple Choice
In countries with a dual board structure, the supervisory board is elected by:
shareholders only
employees only
shareholders and employees only
shareholders, employees and members of the management board
- 31. Multiple Choice
Business ethics are primarily moulded by the expectations of:
directors
customers
government
society
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