Chapter 12. Corporate Governance
and Business Ethics
True or false: The shared value creation framework aims to reconcile the concept of
gaining and sustaining a competitive advantage with corporate social responsibility.
-True
-False - answer-True
Private start-up companies valued at over $1 billion, such as some of those in the tech
sector, are called ______.
-unicorns
-butterflies
-piranhas
-dragons - answer-unicorns
What are the four characteristics of a public stock company that make it an attractive
corporate form? (Check all that apply.)
-separation of ownership and control
-private ownership
-legal personality
-limited liability for investors
-funded mostly by friends and family
-transferability of investor interests - answer-separation of ownership and control
-legal personality
-limited liability for investors
-transferability of investor interests
Economist Michael Porter and many others argue that the value of public stock
companies is too narrowly defined in terms of ______, leading to scandals and
economic crises.
-financial performance
-sales volume
-social initiatives
-environmental protection - answer-financial performance
Social consequences of business activities, including pollution, energy loss, and
dangerous accidents, are known as ___.
, -externalities
-overruns
-output incidences
-unicorns - answer-externalities
Svanhildur's company is committed to corporate social responsibility but also
understands that growth and profit are imperative for survival. What should Svanhildur's
company do to achieve this balance?
-It should apply agency theory.
-It should use the shared value creation framework.
-It should manipulate corporate-governance mechanisms.
-It should adopt a functional corporate structure. - answer-It should use the shared
value creation framework.
Corporate governance is a system of ______.
-legal and ethical issues
-related and unrelated diversification
-checks and balances
-inputs and outputs - answer-checks and balances
Which type of company is considered a unicorn?
-a private company that was once valued at over $100 million but has since lost most or
all of its value
-a public company valued at over $1 billion
-a public company whose share price exceeds $1,000
-a private start-up company valued at more than $1 billion - answer-a private start-up
company valued at more than $1 billion
Which of the following is an example of an application of agency theory?
-personal time
-employment contracts
-new employee orientation
-company holidays - answer-employment contracts
In regard to the public stock company, limited liability means that ______.
-investors are not responsible for any debts incurred by the company and are only at
risk of losing the invested capital
-employees are free to pursue any initiative that interests them
-the company does not have any responsible to earn a profit on invested capital
and Business Ethics
True or false: The shared value creation framework aims to reconcile the concept of
gaining and sustaining a competitive advantage with corporate social responsibility.
-True
-False - answer-True
Private start-up companies valued at over $1 billion, such as some of those in the tech
sector, are called ______.
-unicorns
-butterflies
-piranhas
-dragons - answer-unicorns
What are the four characteristics of a public stock company that make it an attractive
corporate form? (Check all that apply.)
-separation of ownership and control
-private ownership
-legal personality
-limited liability for investors
-funded mostly by friends and family
-transferability of investor interests - answer-separation of ownership and control
-legal personality
-limited liability for investors
-transferability of investor interests
Economist Michael Porter and many others argue that the value of public stock
companies is too narrowly defined in terms of ______, leading to scandals and
economic crises.
-financial performance
-sales volume
-social initiatives
-environmental protection - answer-financial performance
Social consequences of business activities, including pollution, energy loss, and
dangerous accidents, are known as ___.
, -externalities
-overruns
-output incidences
-unicorns - answer-externalities
Svanhildur's company is committed to corporate social responsibility but also
understands that growth and profit are imperative for survival. What should Svanhildur's
company do to achieve this balance?
-It should apply agency theory.
-It should use the shared value creation framework.
-It should manipulate corporate-governance mechanisms.
-It should adopt a functional corporate structure. - answer-It should use the shared
value creation framework.
Corporate governance is a system of ______.
-legal and ethical issues
-related and unrelated diversification
-checks and balances
-inputs and outputs - answer-checks and balances
Which type of company is considered a unicorn?
-a private company that was once valued at over $100 million but has since lost most or
all of its value
-a public company valued at over $1 billion
-a public company whose share price exceeds $1,000
-a private start-up company valued at more than $1 billion - answer-a private start-up
company valued at more than $1 billion
Which of the following is an example of an application of agency theory?
-personal time
-employment contracts
-new employee orientation
-company holidays - answer-employment contracts
In regard to the public stock company, limited liability means that ______.
-investors are not responsible for any debts incurred by the company and are only at
risk of losing the invested capital
-employees are free to pursue any initiative that interests them
-the company does not have any responsible to earn a profit on invested capital
