Ethics Quiz 7-9
Civil Law
-Preponderance of the Evidence (more likely than not) -Damages -Private (parties hire their own attorneys)
According to our authors, the primary objective of U.S. antitrust laws is to
distinguish competitive strategies that enhance consumer welfare from those that reduce it.
Financial Stability Oversight Council (FSOC)
has the authority to: -limit r closely supervise financial risks • Create stricter standards for banking and nonbanking financial institutions, and • Disband financial institutions that present a serious risk to market stability
Voluntary Practices
include the beliefs, values, and voluntary contractual obligations of a business
Federal Trade Commission Act, 1914
Created the FTC to help enforce antitrust laws
Key differences between dodd frank and sarbanes-oxley whistleblower provisions
- SOX: must file with DOL first. If the DOL process not concluded in 280 days, can restart case in federal court
What are some of the steps WorldCom took after its accounting scandal in order to implement an effective ethics and compliance program?
- appointed new leadership, including new board members and a new CEO - established an ethics office -published a code of conduct -implemented an ethics helpline -investigated allegations of wrongdoing -punished wrongdoers -launched communication and training initiatives
Responsibility of the Corporation to Stakeholders
-According to our authors, having an effective ethics & compliance program is part of a corporation's obligation to it stakeholders •Increasingly, corporations are viewed not merely as profit-making entities but also as moral agents accountable for their conduct to their stakeholders, including employees, investors, suppliers, governments, and customers
Mandated boundary
-An externally imposed boundary of conduct (laws, rules, regulations, and other requirements) • For example, antitrust and consumer protection laws create boundaries of propriety that must be respected by companies
According to our authors, organizational cultures can be classified as:
-Apathetic -Caring -Exacting -Integrative -ALL OF THESE
Criminal Law
-Beyond Reasonable Doubt (higher standard, burden) -Jail or Prison; fines -Public (Prosecutor represents community)
2 basic dimensions in an organization's culture:
-Concern for people the organization's efforts to care for its employees' well - being - Concern for performance —the organization's efforts to focus on output and employee productivity
Which of the following statements about corporate culture is/are true?
-Corporate culture includes the behavioral patterns, concepts, values, ceremonies, and rituals that take place in an organization. -The culture of an organization may be explicitly stated or unspoken -Failure to monitor or manage an organization's culture may foster unethical behavior. -ALL OF THESE
Several legislative or regulatory regimes provide or call for mechanisms for employees to raise unethical conduct, including violations of law
-Federal Sentencing Guidelines for Organizations -Sarbanes-Oxley -Dodd-Frank -ALL OF THESE
Which of the following is/are true statements about group norms?
-Group norms are standards of behavior groups expect of their members. -Group norms have the power to force a strong degree of conformity among group members. -Management must carefully monitor the norms of all the various groups within the organization, as well as the organization's corporate culture. -Sanctions may be necessary to bring in line a group whose norms deviate sharply from the overall culture.
According to our authors, which of the following is/are true with respect to centralized and decentralized organizational structures?
-In a centralized organization, decision-making authority is concentrated in the hands of top-level managers, and little authority is delegated to lower levels. -In contrast, in a decentralized organization, decision-making authority is delegated as far down the chain of command as possible. -Because of the strict formalization and implementation of ethics policies and procedures in centralized organizations, they tend to be more ethical in their practices than decentralized organizations, very generally speaking. -ALL OF THESE
Consumer Financial Protection Bureau (CFPB)
-Independent agency within the Federal Reserve System that "regulate(s) the offering and provision of consumer financial products or services under the Federal consumer financial laws" • Power over credit markets as well as authority to monitor lenders and ensure they are in compliance with the law
According to our authors, research indicates that:
-The bottom 10% of employees take advantage of situations to further their own personal interests -Another 40% of employees go along with the group on most matters -Yet another 40% always try to follow company policies and rules -The top 10% maintain formal ethical standards that focus on rights, duties, and rules, and embrace values that assert certain inalienable rights -ALL OF THESE
Whistle-Blower Bounty Program
-Whistle-blower provisions implemented in Sarbanes-Oxley were not enough to prevent the massive misconduct occurring at business institutions before the financial crisis • To encourage more employees to come forward when they witness misconduct, the Dodd-Frank law instituted a whistle-blower bounty program • Whistle-blowers who report financial fraud to the Securities and Exchange Commission and Commodities Exchange Commission are eligible to receive 10 to 30 percent of fines and settlements if their reports result in convictions of more than $1 million in penalties
FSGO Steps
-leadership -tone at the top -core values -walk the talk
Ethics audit
A systematic evaluation of an organization's ethics program and performance to determine effectiveness
Robinson-Patman Act, 193
Bans price discrimination between retailers and wholesalers
FSGO: A "carrot-and-stick" philosophy
Carrot = Avoid penalties should a violation occur• Stick = Possibility of being fined or put on probation if convicted of a crime
core practice
Documented best practices, often encouraged by legal and regulatory forces as well as industry trade associations
Clayton Act, 1914
Prohibits price discrimination, exclusive dealing, and other efforts to restrict competition
The Sarbanes-Oxley Act is known for?
Requiring greater transparency in financial reporting
Whistle-blower protection
SOX whistle-blower protection prohibits the employer from taking certain actions against employees who lawfully disclose private employer information to parties in a judicial proceeding involving a fraud claim, among others
Which of the following includes a requirement that management assess the effectiveness of an organization's internal controls and commission audits of these controls by an external auditor in conjunction with the audit of its financial statements?
Sarbanes-Oxley Section 404
According to the Federal Sentencing Guidelines for Organizations, in order to have an effective compliance and ethics program an organization shall: (1) exercise due diligence to prevent and detect criminal conduct; and (2) otherwise promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law.
TRUE
According to our authors, most of the laws that govern business activities fall into 1 of 5 groups including:
a) Laws Regulating Competition b) Laws Protecting Consumers c) Laws Promoting Equity and Safety d) Protection of the Natural Environment e) Incentives to Encourage Compliance Programs ANSWER f) All of the above
According to our authors, laws that govern equity and safety in the workplace include:
a) Title VII of the Civil Rights Act of 1964 b) Occupational Safety and Health Act c) Pregnancy Discrimination Act d) Americans with Disabilities Act e) Sherman Antitrust Act f) All of the above ANSWER g) a-d only
According to our authors, there are multiple dimensions of institutionalization of business ethics:
a) Voluntary practices that include the beliefs, values, and voluntary contractual obligations of a business b) Core practices that are documented best practices, often encouraged by legal and regulatory forces as well as industry trade associations c) Mandated boundaries that are externally imposed levels of appropriate conduct, such as laws, rules, and regulations ANSWER d) all of the above
The Dodd-Frank Wall Street Reform and Consumer Protection Act is a federal statute that
a. was signed into law by President Obama on July 21, 2010 in order to further regulate our financial system b. among other things, was designed to increase accountability and transparency in the financial industry and protect consumers from deceptive financial practices c. established the Consumer Financial Protection Bureau (CFPB) to protect consumers from unsafe financial products d. gave federal regulators more power over large companies and financial institutions to prevent them from engaging in risky practices or becoming "too big to fail" ANSWER e. all of the above
Because every organization has employees that will try to take advantage if there is an opportunity for misconduct, when developing a values- based ethical culture it must include a(n) _______ element.
compliance
Consumer advocate Ralph Nader demonstrated the lack of credibility of corporations, initially by exposing their:
poor car safety
Sherman Antitrust Act (1890)
prohibits monopolies
