Quiz 4

Consumer Privacy

A consumer's right to be protected from the unwanted collection and use of information about that individual for use in marketing.

Institutional Investor

A financial institution, pension fund, insurance company, university endowment, or similar organization that invests its accumulated funds in securities offered for sale on stock exchanges.

A situation that could cause a firm to compromise an employee's privacy rights is best shown by which example?

A firm that learns that a worker has a serious medical condition

The problem of alcohol and drug abuse in the workplace affects how much of the workforce?

A small fraction

Government efforts to protect consumer privacy include which action?

A telemarketing "do not call" list

In the context of the doctrine of employment-at-will, identify the restrictions on employers termination of employees without a written employment contract.

Any reason that violates the Worker Adjustment Retraining Notification Act Discrimination based on factors such as race or religion Any reason that constitutes a violation of public policy

Employees depend on employers in what ways?

Employees develop a sense of self through their employer. Employees receive compensation from their employer. Employees earn retirement savings through their employer.

Employers depend on employees in what ways?

Employers need employees to make products. Employers need employees to provide services.

A company that develops strong bonds with its employees often realizes which workforce benefits?

Enhanced loyalty Increased productivity

The right to be forgotten, which protects individual information during Google searches, was implemented in which part of the world?

European Union

True or False: The "gig economy" has forced companies to become less cost-efficient.

False

Match the opinion about drug and alcohol testing in the workplace (in the left column) with its related reasoning (in the right column).

In favor of drug and alcohol testing- It reduces potential harm in the workplace, and it save the company money. Opposed to drug and alcohol testing- It violates due process rights, and intrudes on individual privacy.

Income inequality in the United States has changed in what way since 1980?

It increased dramatically.

How can employers monitor workers without sacrificing their privacy?

Monitor employees only for cause. Clearly define all monitoring policies.

The law that gives workers the right to a job free from recognized hazards is called the ______.

Occupational Safety and Health Act

Companies can reduce income inequality is what ways?

Pay all employees a living wage. Reduce pay differentials in their firms.

According to a survey conducted by the Society for Human Resource Professionals, under what circumstances are office relationships banned by 99 percent of workplace romance policies?

Relationships between employees in a direct chain of command

In the Wells Fargo example, why was the whistle-blowing manager eventually given his job back?

Retaliation against whistle-blowing is illegal and regulators ordered his return.

Which type of employee drug testing commonly occurs after a work accident?

Testing for cause

After a worker has failed to resolve a harmful work issue internally, which conditions would further justify whistle-blowing?

The harm is serious enough to justify the probable costs of disclosure to the whistle-blower. Reporting the problem publicly will probably stop or prevent the harm.

How has the Occupational Safety and Health Act (OSHA) benefited employers since its passage?

The number of lost workdays has been reduced. Worker compensation costs have decreased.

How has the Occupational Safety and Health Act benefited workers since its passage?

The number of overall workplace deaths has significantly decreased. The rate of lead poisoning has dropped dramatically. Deaths from brown lung have been notably reduced.

A worker is morally justified to initiate whistle-blowing under which employment conditions?

The organization is doing (or will do) something that seriously harms others. The employee has tried and failed to resolve the issue within the organization.

In the past, most office romance policies followed which approach?

They banned all workplace romances across the board.

Whistle-blowing often results in which costs to the whistle-blower?

They may be unfairly ostracized. They may be demoted or fired.

Identify one valid reason that justifies management's use of employee monitoring.

To measure worker productivity

True or False: Employees have a duty to behave responsibly in the workplace such as dealing with customers and coworkers in an honest, fair, and nondiscriminatory way.

True

How have right-to-work laws affected labor unions?

Unions were weakened due to decreased worker rights.

According to the legal doctrine employment-at-will, a worker without an employment contract can be fired for ______.

any bad cause any good cause no cause at all

The main responsibilities of the Occupational Safety and Health Administration include ______.

assigning fines to health and safety violators. enforcing health and safety standards. setting health and safety standards.

Workplace drug abuse in the United States costs business about $193 billion a year, including ______.

lost productivity rehabilitation services medical claims

In the workplace, protecting workers' personal life from unwarranted intrusion by the employer is termed ______.

privacy rights

When a company takes back dangerous or defective products, this is called a ______.

product recall

When someone is entitled to be treated in a certain way, this is referred to as a ______.

right

In 2017, Missouri passed a _______ law that bans unions from requiring member dues.

right-to-work

According to the say-on-pay rule of the Dodd-Frank Act, public companies must hold shareholder votes on executive compensation at least once every _____ years.

three

Labor unions, such as the Teamsters, are most accurately defined as organizations that represent ______.

workers on the job

Deceptive advertising is best illustrated by which examples?

A company falsely claiming that their medication prevents criminal behavior An unsubstantiated "organic" label on personal care products

Identify the scenario that best exemplifies product liability.

A firm failed to warn consumers that their talcum powder products can cause ovarian cancer.

Stock Options

A form of compensation. Options represent the right (but not obligation) to buy a company's stock at a set price (called the strike price) for a certain period of time. The option becomes valuable to its holder when, and if, the stock price rises above this amount.

Shareholder Lawsuits

A lawsuit initiated by one or more shareholders to recover damages suffered due to alleged actions of the company's management.

Strict Liability

A legal doctrine that holds that a manufacturer is responsible (liable) for injuries resulting from the use of its products, whether or not the manufacturer was negligent or breached a warranty.

Proxy

A legal instrument given another person the right to vote the shares of an absentee shareholder; in effect, an absentee ballot for shareholders who not attend the annual meeting in person.

Alternative Dispute Resolution

A method for resolving legal conflicts outside the traditional court system, in which a professional mediator (a third-party neutral) works with the two sides to negotiate a settlement agreeable to both parties.

Shareholder

A person, group, or organization owning one or more shares of stock in a corporation; the legal owners of the business.

Social Responsibility Shareholder Resolution

A resolution on an issue of corporate social responsibility placed before shareholders for a vote at a company's annual meeting.

Consumer Movement

A social movement that seeks to augment the rights and powers of consumers. ( Also known as consumerism.)

Minimum Wage

A wage employers must pay a worker, usually an hourly rate, as required by law.

Living Wage

A wage that enables workers, paid for a standard work week, to support half of the basic needs of an average-sized family based on local prices near the workplace; generally above the legal-mandated minimum wage.

Ergonomics

Adapting the job to the worker, rather than forcing the worker to adapt to the job.

Behavioral Advertising

Advertising that targets particular customers based on their observed online behavior.

Quality Management

All measures taken by an organization to assure quality, such as defining the customer's needs, monitoring whether or not a product or service consistently meets these needs, analyzing the quality of finished products to assure they are free of defects, and continually improving processes to eliminate quality problems.

Deceptive Advertising

An advertisement that makes false or misleading claims about the company's own product or its competitor's product, withholds relevant information, or creates unreasonable expectations; generally illegal in most countries.

Board of Directors

An elected group of individuals who have a legal duty to establish corporate objectives, develop objectives, develop broad policies, and select top-level personnel for a company

Whistle-Blowing

An employee's disclosure of alleged organized misconduct to the media or appropriate government agency, often after futile attempts to convince organizational authorities to take action against the alleged abuse.

Social Contract

An implied understanding between an organization and its stakeholders as to how they will act toward one another.

Labor Union

An organization that represents workers on the job and that bargains collectively with the employer over wages, working conditions, and other terms of employment.

Quality management business processes voluntarily address customers' interests in what positive ways?

Assuring defect-free products Identifying customers' needs Monitoring customer satisfaction

Boards of directors can address the agency problem by doing what to executive compensation?

Basing executive compensation on the performance of the company. Providing large stock option grants to executives.

Median total compensation of the chief executive of large public corporations typically includes which forms of payment in addition to a salary?

Bonuses Stock options Retirement benefits

The primary goal of most shareholders is to make money through which means?

Capital appreciation Dividends

Proxy Access

Changes in the nomination process for a company's board of directors that allows shareholders to nominate their own candidates.

Employee Assistance Programs (EAPs)

Company-sponsored programs to assist employees with alcohol abuse, drug abuse, mental health, and other problems.

Match the consumer privacy solution (in the left column) with its related actions (in the right column).

Consumer self-help-- Includes cookie management, enabling encryption, and understanding privacy settings. Industry self-regulation-- Includes voluntary policies for privacy protection, lets consumers set data collection preferences, and allows consumers to set advertising preferences. Privacy legislation-- Refers to recommended "opt-out" tools for consumers, suggested retention time limits on collected data, and recommended disclosure of how consumer data is used.

Match the consumer rights protection method (in the left column) with its correct description (in the right column), using Figure 14.1.

Consumerism-- This refers to protecting one's own interests as a consumer. Government regulation-- This means passing laws that ensure product safety. Law/Courts-- This is taking legal action against product harm. Industry self-regulation-- This refers to protecting a firm's customers proactively.

How is the Securities and Exchange Commission funded?

Corporate listing fees

Groups that track, collect and combine private consumer data from various sources into individual profiles that are sold to retailers and advertisers are called ______.

Data aggregators

Match the consumer protection category (in the left column) with its related example (in the right column).

Direct hazard-- Warnings about drug side-effects, restrictions on pesticides in food, and a ban on lead-based paint and unsafe children's toys and games are required. Pricing-- Unfair product charges, monopolistic practices, and noncompetitive acts are prohibited. Liability-- When injured by a product, consumers can seek legal redress. Privacy-- Limited collection of information online from and about children is allowed.

True or False: The movement to improve corporate governance has grown only in the United States, not in other parts of the world.

False

Some support high executive compensation because of which reasons?

High pay is a reward for outstanding performance. High compensation provides an incentive for innovation. High salaries compensate high-quality talent.

Identify the reasons why some have concerns about high executive compensation.

High salaries divert funds that could have been used to pay shareholder dividends. High compensation creates resentment from lower-level workers. The relationship between company success and executive compensation is weak

Match the shareholder type (in the left column) with its matching description (in the right column).

Individual Investor- People with direct stock ownership; also called "Main Street" investors Institutional Investor- Organizations such as pension funds and insurance companies; also called "Wall Street" investors

What is one common method used by compensation committees to help set executive pay amounts?

Industry average salary surveys

Increased institutional activism has generally affected company performance in what way?

It has improved.

Insider trading is correctly described by which statements?

It refers to trading stocks based on confidential information. It includes using confidential information to gain an unfair advantage. It includes disclosing confidential information to increase personal gain.

Consumer Protection Laws

Laws that provide consumers with better information, protect consumers from possible hazards, encourage competitive pricing, protect privacy, or permit consumer lawsuits.

The consumer affairs officer is typically in charge of which responsibilities?

Management of a customer call center Oversight of a self-service website Monitoring customer social media posts

Consumer Affairs Officer

Manages the complex network of consumer relations.

What is the current trend in corporate information disclosure as prompted by the SEC?

More information is being disclosed. More information is now available on company websites.

Match the key feature of executive boards (in the left column) with their related benefit (in the right column).

Most members should be outside directors- This allows the board to make impartial decisions. Hold open elections for board members- This allows for genuine choice of board candidates. Hold elections for board members annually, not every other year- This can increase accountability and responsiveness to shareholders. Appoint an independent lead director- This allows for candid discussions about the company. Diversity board membership- This widens the range of experiences, perspectives, and values

Product Recall

Occurs when a company, either voluntarily or under an agreement with a government agency, takes back from its distribution channels all items found to be dangerously defective.

Insider Trading

Occurs when a person gains access to confidential information about a company's financial condition and then uses that information, before it becomes public knowledge, to buy or sell the company's stock; generally illegal.

Private Equity Firms

Organizations that manage pools of money invested by very wealthy individuals and institutions.

Hedge Funds

Pools of private capital, so-called because of the aggressive strategies used to earn high returns for their investors.

How do businesses and industries protect consumers from harmful products, as shown in Figure 14.1?

Product recalls Quality programs Voluntary codes

Employee Privacy

Protecting an individual employee's personal life from unwanted intrusion by the employer.

The consumer movement in the United States is currently championed by which nongovernmental organizations?

Public Interest Research Group Consumer Federation of America National Consumers League

What are the major functions of the Securities and Exchange Commission?

Regulation of unfair stock trading Regulation of financial fraud Information transparency

Match the five core rights of consumers on the left with their correct descriptions on the right.

Right to be informed-- Having the facts to make an informed purchasing decision Right to safety-- Protection against hazardous or life-threatening products Right to choose-- Access to a variety of products at fair prices Right to be heard-- Full consideration for consumer interests in the courts Right to privacy-- Protection of personal data during commercial transactions

A man who returns a toaster that shoots sparks when plugged in is exercising the consumer protection right to ______.

Safety

Which topics do shareholders have the legal right to vote on?

Selecting members of the board of directors Charter and bylaw changes Company mergers and acquisitions Proposals by the stock owners

Why does the Securities and Exchange Commission (SEC) require publicly-held corporations to disclose significant financial information?

Shareholders have the right to know about company dealings. Future company goals are important to investors. Information disclosure safeguards shareholder interests.

Social investment is a strategy for promoting which objectives?

Social Environmental Governance

Social investors often promote their objectives through which means?

Stock purchase screening Stock divestment Shareholder resolutions

Market stakeholders who have ownership in a firm are called ______.

Stockholders Shareholders Investors

Occupational Safety and Health Administration (OSHA)

The U.S. federal government agency empowered to set and enforce worker safety and health standards.

Securities and Exchange Commission (SEC)

The U.S. federal government agency whose mission is to protect stockholders' rights by making sure that stock markets are run fairly and that investment information is fully disclosed.

Identify the risk to shoppers introduced through the collection, buying, selling, and usage of vast amounts of personal consumer data.

The chance that one's personal information could be used fraudulently A major violation of privacy that might lead to unanticipated harm

Executive Compensation

The compensation (total pay) of corporate executives, including salary, bonus, stock options, and various benefits.

The European two-tier board system is best described by which statements?

The executive board consists of the CEO and inside members. The supervisory board includes an independent chairperson.

Product liability is accurately defined by which statement?

The law proactively deters irresponsible behavior by companies.

Product Liability

The legal responsibility of a firm for injuries caused by something it made or sold.

The agency problem pits the interests of the firm against those of the firm's agent. In a corporation, who is the agent?

The managers in the company

Employment-At-Will

The principle that workers are hired and retain their jobs solely "at the will of" (that is, sole discretion of) the employer.

Corporate Governance

The process by which a company is controlled or governed.

From a consumer perspective, what is the primary problem related to product recalls?

The public may not actually be aware of the recall.

In what ways has the ratio of top executive pay compared to average workers' pay changed over time?

The ratio decreased during periods of economic contraction. The ratio increased during periods of economic expansion.

Deceptive advertising is best defined by which statements?

The setting of unreasonable expectations about a product The omission of relevant information False or misleading claims about a product

The consumer movement is most accurately described by which statements?

The term consumerism as a synonym for the consumer movement Consumer collectives that speak for the interests of millions of shoppers Organized groups of consumers safeguarding their own rights

Drug Testing (of Employees)

The testing of employees, by the employer, for the presence of illegal drugs, sometimes by means of a urine sample, saliva, or hair follicle analyzed by a clinical laboratory.

Electronic Monitoring (of Employees)

The use by employers of electronic technologies to gather, store, and monitor information about employees' activities.

Social Investment

The use of stock ownership as a strategy for promoting social, environmental, and governance objectives. (Also called social responsible investment or sustainable, responsible, and impact investment, or SRI.)

A manager tells his wife about his firm's latest acquisition before the news is made public. His wife then tells her brother. Which examples accurately illustrate insider trading?

The wife's brother buys the firm's stock and earns a large profit before the news is publicized. The manager's wife buys the firm's stock and earns a large profit before the news is publicized.

The say-on-pay rules have had what effects on executive compensation?

They provided a way for shareholders to express their views on compensation. Executive pay has fallen in places where these rules were in effect.

The Children's Online Privacy Protection Act of 2000 limits the collection of information online from and about children under the age of ______.

Thirteen

How do top managers influence executive pay?

Through influencing the selection of board members Through ties of friendship with board members

Other than financial gain, shareholders often invest for which reasons?

To achieve social objectives To achieve ethical objectives To take control over a firm

Identify the primary goals of corporate governance.

To balance stakeholder interests To identify the strategic direction for the firm To develop internal policies

What is the primary reason that businesses adopt voluntary codes of conduct?

To forestall stricter regulation by government

Identify the goals of consumer protection law.

To promote competitive pricing on goods and services To protect consumers against possible hazards To ensure consumer choice of products and services

Besides the right to vote, what are the other major legal rights of shareholders?

To receive annual financial reports To sell stock to others To receive declared dividends

True or False: The consumer affairs officer of today uses large amounts of customer data to predict what an individual might wish for and then prescribe the best way to meet those needs.

True

Say-On-Pay

U.S. regulation requiring public companies to hold an advisory shareholder vote on executive compensation at least once every three years; also required in several other countries.

Rank the top five reported 2014 global average annual CEO compensation by country from highest to lowest, according to Figure 13.4.

United States Switzerland Germany Spain Australia

A typical board of directors in the United States is accurately described by which statements?

about 20 percent of members are women may include executives of other firms

In the United States, CEOs in 2016 made ______ times what the average worker did.

exactly 347

The major functions of a labor union include _______.

negotiating employee wages. ensuring safe working conditions.

Institutional investors have attempted to increase their influence over management because the alternative of ________.

selling blocks of shares reduces stock price and overall holdings.

The term corporate governance refers to ______.

the process by which a company is controlled or governed