Professional Ethics & Governance Flashcards

A board of directors is evaluating a major acquisition that benefits the CEO personally. Which governance safeguard is most appropriate?

Answer: Require the CEO to recuse from the vote and form an independent committee

When a conflict of interest exists, the conflicted party should recuse themselves, and an independent committee should evaluate the transaction to protect shareholders.

The 'triple bottom line' framework in strategic governance measures organizational performance across:

Answer: People, planet, and profit

The triple bottom line framework evaluates organizational success across social (people), environmental (planet), and financial (profit) dimensions simultaneously.

Which type of audit specifically evaluates whether an organization is following its own stated ethical policies and codes of conduct?

Answer: Ethics and compliance audit

An ethics and compliance audit systematically examines whether the organization's practices align with its stated ethical policies, codes of conduct, and regulatory requirements.

Stakeholder theory in strategic management argues that managers should primarily:

Answer: Balance the interests of all parties affected by the organization's actions

Stakeholder theory holds that organizations have ethical obligations to all parties impacted by their decisions, not just shareholders, requiring managers to balance competing interests.

Which governance principle requires that decision-makers be answerable for their actions and the outcomes of those actions?

Answer: Accountability

Accountability is the governance principle that holds individuals responsible for their decisions and requires them to answer to stakeholders for the consequences of those decisions.

A strategic manager faces pressure to cut corners on environmental compliance to meet quarterly targets. This scenario represents a conflict between:

Answer: Short-term financial goals and long-term ethical obligations

This scenario illustrates the classic tension between short-term financial performance pressure and the organization's long-term ethical, legal, and sustainability obligations.

In corporate governance, an 'independent director' is best defined as a board member who:

Answer: Has no material relationship with the company that could compromise objectivity

An independent director has no material financial, personal, or professional ties to the company or its management that could impair their ability to exercise objective judgment.