Chapter 10—Moral Choices Facing Employees
MULTIPLE CHOICE
1. Based on guidelines of employer/employee relations, which statement is true?
a. company loyalty is an outmoded, illegitimate concept that employees today reject
b. the traditional law of agency obliges employees to act loyally and in good faith and to
carry out lawful instructions
c. an employee's work contract is irrelevant to his or her moral obligations
d. no value is more important than loyalty, whether to a person or an organization
ANS: B
PTS: 1
REF: Page 355
2. Conflicts of interest
a. have become less frequent today.
b. always involve personal financial gain.
c. are morally worrisome only when the employee acts to the detriment of the company.
d. occur when employees' private interests are substantial enough to potentially interfere with
their job duties.
ANS: D
PTS: 1
REF: Page 356
3. According to the Supreme Court,
a. there is nothing improper about an outsider’s using information, as long as the information
is not obtained from an insider who breaches a legal duty to the corporation’s
shareholders.
b. anyone buying/selling stock based on nonpublic information is guilty of inside trading.
c. insider trading violates the interstate commerce clause of the Constitution.
d. it should be left up to the company, not the government, to decide whether or not to
prohibit insider trading.
ANS: A
PTS: 1
REF: Page 360
4. A "trade secret"
a. is legally equivalent to a patent or copyright.
b. need not be treated confidentially by the company in order to be protected.
c. can become part of an employee's technical knowledge, experience, and skill.
d. is a narrow, precise concept that the law defines in great detail.
ANS: C
PTS: 1
REF: Pages 363
5. The Foreign Corrupt Practices Act (FCPA)
a. doesn't apply to countries where bribery is common.
b. is alleged by its critics to put American companies at a disadvantage.
c. carefully distinguishes bribery from extortion payments.
d. outlaws "grease payments".
ANS: B
PTS: 1
REF: Page 366
6. In determining the morality of giving and receiving gifts in a business situation, which of the following
factors is MOST relevant?
a. the purpose of the gift
b. the size of the business
c. amount of the cash
d. whether the company is privately held or publicly held
ANS: A
PTS: 1
REF: Page 368
7. A whistle-blower
a. doesn't have to be a past or present member of the organization.
b. doesn't have to report activity that is illegal, immoral, or harmful.
c. is any employer who spreads gossip.
d. far from being disloyal, may be acting in the best interest of the organization.
ANS: D
PTS: 1
REF: Page 374
8. The Sarbanes-Oxley Act
a. makes it easier to fire whistle blowers.
b. reduces the law's protection of employees who disclose securities fraud.
c. makes it illegal for executives to retaliate against employees who report possible
violations of federal law.
d. provides penalties for blowing the whistle illegitimately or maliciously.
ANS: C
PTS: 1
REF: Pages 379-380
9. According to Professor Norman Bowie, which of the following factors is relevant to determining the
morality of blowing the whistle?
a. the whistle blower's motive
b. whether internal channels have been exhausted
c. whether the whistle blowing has some chance of success
d. all of the above
ANS: D
PTS: 1
REF: Pages 374-375
10. In discussing the case of the truck stop cashier who is asked to write up phony chits or receipts, the
text argues that
a. there is nothing wrong with writing up the chits.
b. she should resign immediately.
c. she may be justified in "going along," at least temporarily.
d. morality never requires us to sacrifice our own interests.
ANS: C
PTS: 1
REF: Page 377
11. In the 1997 case of U.S. v. Hagan, the Supreme Court found that Hagan
a. had been discriminated against because of whistle blowing.
b. was innocent of insider trading.
c. violated the FCPA despite never having gone overseas.
d. had misappropriated confidential information.
ANS: D
PTS: 1
REF: Page 360
12. The Donald Wohlgemuth case shows that
a. trade secrets can be patented.
b. trade secrets often become an integral part of an employee's total job skills and
capabilities.
c. employees need to divest themselves of any skill acquired while handling trade secrets.
d. "noncompete" or "nondisclosure" contracts are always legally valid.
ANS: B
PTS: 1
REF: Page 363
13. Some writers deny that employees have any obligation of loyalty to the company, because
a. companies are not the kind of things that are properly objects of loyalty.
b. you cannot trust anyone.
c. it’s every man for himself.
d. companies just aren’t the same any more.
ANS: A
PTS: 1
REF: Page 355
14. When an employee’s interests are likely to interfere with the employee’s ability to exercise proper
judgment on behalf of the organization, what exists?
a. a golden opportunity
c. a balance of power
b. a conflict of interest
d. a disaster
ANS: B
PTS: 1
REF: Pages 356
15. Insider trading is
a. the buying or selling of stocks (or other financial securities) by business “insiders” on the
basis of information that has not yet been made public and is likely to affect the price of
the stock.
b. a corporate merger.
c. knowing when to make the best buy.
d. giving great advice on a deal.
ANS: A
PTS: 1
REF: Page 359
16. Inside traders ordinarily defend their actions by claiming that they don’t injure
a. the boss.
b. their family.
c. the President.
d. anyone.
ANS: D
PTS: 1
REF: Page 359
17. Shaw and Barry mention three arguments for legally protecting trade secrets. Which of these
is one of them?
a. Trade secrets are the intellectual property of the employee who developed them.
b. Employees who disclose trade secrets
violate the confidentiality owed to their employers
c. Trade secrets are patented.
d. Trade secrets are trademarked.
ANS: B
PTS: 1
REF: Pages 363
18. U.S. companies have a history of paying off foreign officials for business favors. Such acts were
declared illegal by
a. the U.S. Customs department.
b. the Vice President.
c. the Foreign Corrupt Practices Act (FCPA) of 1977.
d. the United Nations.
ANS: C
PTS: 1
REF: Page 365
19. To resolve difficult moral dilemmas, the better we understand the exact ramifications of the
alternatives—the more likely we are
a. to make a sound moral decision.
c. to be a success.
b. to drive the boss crazy.
d. to go to jail.
ANS: A
PTS: 1
REF: Page 371
20. Whistle-blowing involves exposing activities that are
a. sports related.
c. too close to call.
b. immoral or illegal.
d. boring and need some excitement.
ANS: B
PTS: 1
REF: Page 374
21. Whistle-blowers are only human beings, not saints, and they sometimes have their own
a. salary.
c. bandwagon.
b. self-serving agenda.
d. office.
ANS: B
PTS: 1
REF: Page 375
22. Which act provides sweeping new legal protection for employees who report possible securities fraud,
making it unlawful for companies to “discharge, demote, suspend, threaten, harass, or in any other
manner discriminate against” them?
a. Sarbanes-Oxley Act of 2002
c. Economic Espionage Act
b. Foreign Corruption Act
d. U.S. vs. O’Hagan
ANS: A
PTS: 1
REF: Page 379-380
23. Conflicts of interest may exist when employees have financial investments
a. in suppliers, customers, or distributors with whom their organizations do business.
b. in sports teams.
c. and question the wisdom of the deal.
d. that lead to office romance.
ANS: A
PTS: 1
REF: Page 357
24. The use of one’s official position for what always raises moral concerns and questions?
a. power trips
c. stepping stones to success
b. egos
d. personal gain
ANS: D
PTS: 1
REF: Page 358
25. Experimental studies suggest that when informed that the advice they’re receiving may be biased
because of a conflict of interest,
a. those who disclose a conflict of interest rarely end up giving more biased advice than
those who do not disclose
b. those who disclose a conflict of interest always end up giving more biased advice than
those who do not disclose
c. People tend to fail to discount the advice as much as they should.
d. people tend to discount the advice as much as they should.
ANS: C
PTS: 1
REF: Page 357
TRUE/FALSE
1. An employee can have a conflict of interest even if he or she doesn't act to the detriment of the
organization.
ANS: T
PTS: 1
REF: Page 356
2. Insider trading is the buying or selling of stocks by insiders on the basis of information attained by an
“insider” that has not yet been made public and is likely to affect the price of the stock.
ANS: T
PTS: 1
REF: Page 359
3. The law precisely defines the concept of a trade secret, just as it does patents and copyrights.
ANS: F
PTS: 1
REF: Page 362
4. A kickback is a kind of bribe.
ANS: T
PTS: 1
REF: Page 365
5. By definition, whistle-blowing can only be done by a past or present member of the organization.
ANS: T
PTS: 1
REF: Page 374
6. Prudential reasons are reasons that refer to the interests of others and the demands of morality.
ANS: F
PTS: 1
REF: Page 377
PTS: 1
REF: Page 364
7. All gifts are bribes.
ANS: F
8. According to Norman Bowie, whistle blowing can never be justified because it involves violating one's
duties to the organization.
ANS: F
PTS: 1
REF: Page 374-375
9. A bribe is remuneration for the performance of an act that's inconsistent with the work contract or the
nature of the work one has been hired to perform.
ANS: T
PTS: 1
REF: Page 364
10. The Supreme Court has rejected the idea that inside trading involves "misappropriating" confidential
information.
ANS: F
PTS: 1
REF: Page 360
11. A conflict of interest arises when an employee has private interests that are substantial enough to
potentially interfere with his or her job duties.
ANS: T
PTS: 1
REF: Page 356
12. The Foreign Corrupt Practices Act (FCPA) outlaws grease payments.
ANS: F
PTS: 1
REF: Page 365
13. A common argument against the Foreign Corrupt Practices Act is that it illegitimately imposes
parochial American standards on foreign countries.
ANS: T
PTS: 1
REF: Page 366
14. Employees have no obligations to people with whom they have no business relations.
ANS: F
PTS: 1
REF: Page 371
15. As a general rule, if the contents of the work agreement that exists between the employee and the
employer are legal and if the employee freely consents to them, then the employee is under an
obligation to fulfill the terms of the agreement.
ANS: T
PTS: 1
REF: Page 356
16. Sometimes companies require employees to sign contracts restricting their ability to get a job with, or
start, a competing company. Because they can conflict with freedom of employment, not all such
“noncompete” or “nondisclosure” contracts are legally valid.
ANS: T
PTS: 1
REF: Pages 364
17. Justice Ginsberg and Arthur Levitt suggest that allowing insider trading could lead to a widespread
perception that “the game is rigged.”
ANS: T
PTS: 1
REF: Page 361
18. The Foreign Corrupt Practices Act of 1977 forbids companies to pay kickbacks in the United States,
but permits them to pay kickbacks to companies outside the United States.
ANS: F
PTS: 1
REF: Page 365
19. Employees have certain general duties to their employers, and because of the specific business,
professional, or organizational responsibilities they have assumed, they may have other more precise
role-based obligations.
ANS: T
PTS: 1
REF: Page 371
20. When faced with a moral decision, employees should follow the two-step procedure of identifying the
relevant obligations, ideals, and effects; and then decide where the emphasis should lie among these
considerations.
ANS: T
PTS: 1
REF: Page 371-372
21. According to one expert's definition, whistle blowing is conceptually restricted to reporting on
activities that are harmful to third parties, violations of human rights, or contrary to the public purpose
and legitimate goals of the organization.
ANS: T
PTS: 1
REF: Page 374
22. According to Norman Bowie, a discussion of whistle blowing in the 1990s parallels the discussion of
civil disobedience in the 1960s.
ANS: T
PTS: 1
REF: Page 374
23. Prudential reasons are those moral reasons that are separate from self-interest.
ANS: F
PTS: 1
REF: Page 377
24. According to Jennifer Moore the real reason insider trading should be prohibited is that it undermines
the fiduciary relationship that is at the heart of business management.
ANS: T
PTS: 1
REF: Page 361
25. The Sarbanes-Oxley Act weakened legal protections for whistle blowers.
ANS: F
PTS: 1
REF: Page 379-380
SHORT ANSWER
1. When does a conflict of interest arise?
ANS:
A conflict of interest arises when employees at any level have special or private interests that are
substantial enough to interfere with their job duties—that is, when their personal interests lead them, or
might reasonably be expected to lead them, to make decisions or to act in ways that are detrimental to
their employer’s interests.
PTS: 1
REF: Page 356
2. What is insider trading?
ANS:
One common way of abusing one’s official position is through insider trading: the buying or selling of
stocks (or other financial securities) by business “insiders” on the basis of information that has not yet
been made public and is likely to affect the price of the stock.
PTS: 1
REF: Page 359
3. Name an argument that's given against legalizing insider trading?
ANS:
See provided page references.
PTS: 1
REF: Pages 361-362
4. How do trade secrets differ from information that is patented or copyrighted?
ANS:
See provided page references.
PTS: 1
REF: Pages 362-363
5. What are the main features of the 1977 Foreign Corrupt Practices Act (FCPA)?
ANS:
See provided page references
PTS: 1
REF: Page 365
6. Name an argument given against foreign forms of bribery.
ANS:
See provided page references.
PTS: 1
REF: Pages 366-367
7. There are at least seven factors to take into consideration in determining the morality of giving and
receiving gifts in a business situation. Explain three of them.
ANS:
See provided page references.
PTS: 1
REF: Pages 369-370
8. What is whistle-blowing, and what motivates whistle-blowers?
ANS:
See provided page references
PTS: 1
REF: Pages 372-373
9. According to Norman Bowie, whistle-blowing is morally justified only if five criteria are met. What
are these five criteria?
ANS:
See provided page references.
PTS: 1
REF: Pages 375-376
10. What is a key lesson to be learned from the example of the cashier at a truck stop who is asked by her
manager to provide the truckers with phony chits so they can get a larger reimbursement from their
companies?
ANS:
See provided page reference
PTS: 1
REF: Page 377
ESSAY
1. How do we know when whistle-blowing is morally right or wrong? Justify your answer.
ANS:
See provided page reference.
PTS: 1
REF: Page 375-376
2. Consider Coleen Rowley who blew the whistle against the FBI. How could we justify the fact that she
did the right thing? Consider at least two different moral theories.
ANS:
See provided page references
PTS: 1
REF: Page 374
3. When, if ever, are employees overly disloyal for getting a job for a competing organization? Justify
your answer.
ANS:
See provided page references
PTS: 1
REF: Pages 363-364
4. If all the other businesses in a foreign country are providing a “grease payment” for border patrol. Is it
all right and ethical to do that? State and defend your answer.
ANS:
See provided page references.
PTS: 1
REF: Page 365
5. Provide an example of an abuse of an official position. Justify your answer.
ANS:
See provided page references
PTS: 1
REF: Pages 358-362