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Corporate, Legal and Ethical, Responsibility > Test #2 > Flashcards

Test #2 Flashcards

1
Q

who regulates license requirements

A

federal government

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2
Q

3 functions of federal agencies

A

Control of Supply: control entry into certain economic activities (FDA decides what drugs enter the market)
Control of Rates: sets prices to be charged for services offered within their jurisdiction (federal energy regulatory commission)
Control of Conduct: Information (must disclose information that normally would have been kept private), Standards (ladder might be required to safely hold at least a specific weight), Product Banishment

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3
Q

explain the checks and balances for agencies

A

Executive restraints: requiring
cost-benefit analyses for new rules and commanding agencies to cite a specific market failure before issuing a new rule. Congressional restraints: thus can encourage or discourage particular agency action. Broadly, Congress oversees
agency action, and agencies often check with Congress before undertaking major initiatives. Congress can directly intervene by amending the enabling legislation or by passing laws that require agencies to take specific directions.

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4
Q

what is it called to make government stronger

A

deregulation

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5
Q

what are the 3 types of agency rules

A

Procedural: delineate the agency’s internal operating structure and methods
Interpretive: offer the agency’s view of the meaning of those statutes for which the agency has administrative responsibility
Legislative: policy expressions having the effect of law

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6
Q

what was the names of the act that bailed out the banks

A

troubled asset relief program (TARP)

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7
Q

what did the Dodd Frank Wall Street Reform and Consumer Protection Act require banks to do

A

have larger capital holdings

requires disclosure of the relationship between executive compensation and financial performance of the company giving consideration to both stock price and dividends

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8
Q

clause in the constitution that allows congress to regulate businesses

A

Supremacy Clause

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9
Q

Name 4 types of business entities

A

Corporation (S corp, C corp)
Sole Proprietorship
Partnership
Limited Liability Corporation

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10
Q

S-Corp Characteristics

A

Uses tax returns of the owners, issues shares of stock, must file paperwork w/ secretary of state, owners do not have liability other than investment in the business but can only issue 100 shares of stock and is not double taxed

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11
Q

Articles of Incorporation

A

document filed with a state to create a corporation

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12
Q

Derivative suit

A

A lawsuit by stock holders on behalf of the corporation where the corporation declines to act to protect the organization’s rights against the conduct of an officer, director, or outsider

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13
Q

Piercing the Corporate Vail

A

holding a shareholder responsible for acts of a corporation due to a shareholders domination and improper use of the corporation

Owner of the corporation is found liable for acts of the corporation

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14
Q

What business Entity is double taxed

A

Corporation (C Corp)

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15
Q

name 3 types of ownership interest of stock

A

the right to participate in earnings (that is, dividends), the right
to participate in assets upon liquidation, and the right to participate in control.

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16
Q

Preferred Stock

A

are paid their required annual dividend in full before any dividends are distributed to the common stockholders.

have a preference upon the corporation’s liquidation.

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17
Q

Ownership interest in a corporation

A 
Equity Capital (stock)
Debt (bonds)
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18
Q

what is the business interest where members must file articles of organization with the state and have an operating agreement and annual filings with the state

A

Articles of incorporation

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19
Q

what are the people called who are elected by the shareholders and establish corporate policy

A

board of directors

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20
Q

Common stock

A

only one class exists

share all three property rights in proportion to their holdings

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21
Q

What act was created after the financial disaster that requires corporations to disclose executive compensation

A

Dodd Frank Act

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22
Q

Securities act of 1933

A

Seeks to 1) ensure full disclosure of all material facts about the investment opportunity to offerees (potential Investors) before they invest 2) to eliminate fraudulent conduct in the markets

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23
Q

Initial Public Offering

A

a security offered for sale to the public for the first time

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24
Q

Insider trading

A

trading securities while in possession of material nonpublic information, in violation of fiduciary duty

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25
Q

Tender Offer

A

a public bid to the shareholders of a firm offering to buy shares a specific price for a defined period of time

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26
Q

Poison Pill

A

“flip in gives current shareholders in the target company a tender offer triggered right to buy additional target company stock at a discount thus diluting the hostile bidders shares

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27
Q

Golden Parachute

A

substantial benefits given to top executives in the event that the company is taken over by another firm and the executive is terminated as a result of the merger

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28
Q

4 reasons why antitrust laws were passed

A
  1. preservation of competition
  2. preservation of democracy
  3. preservation of small businesses or more generally the preservation of the american dream
  4. an expression of political radicalism
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29
Q

name the 2 sections the sherman antitrust acts forbids

A
  1. restraint of trade

2. monopolization, attempts to monopolize, and conspiracies to monopolize

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30
Q

4 activities the Clayton Act forbids

A 
Price discrimination
exclusive dealings
tying arrangements
requirements contracts
mergers restraining commerce or tending to create a monopoly 
interlocking directorates
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31
Q

Federal trade commission act

A

elimination of anticompetitive practices in american commerce

“unfair methods of competition and unfair” or “deceptive acts or practices in or affecting commerce”

Primary enforcement device is the cease and desist order

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32
Q

Horizontal Price Fixing

A

competitors may not lawfully agree on prices

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33
Q

Conscious Parrallism

A

conduct by competitors that is very similar or identical but that is not the product of a conspiracy and thus is not in and of itself illegal

34
Q

Resale Price Maintenance

A

Manufactures and distributors often seek to specify the price at which their customers may resell their products

35
Q

4 reasons for resale price maintenance

A
  1. establishing a minimum price to enhance the products reputation
  2. helping retailers make a profit sufficient to provide customer service
  3. preventing discount stores from pricing beneath full price retail outlets
  4. preventing free riders
36
Q

Tying

A

Dealer agrees to sell or lease a product (the tying product) only on the condition that the buyer also purchases or leases another product (the tied product)

37
Q

Test for tying

A
  1. the existence of separate products
  2. a requirement that the purchase of one of the products (the tying product) is conditioned on the purchase of another product (the tied product)
  3. market power in the tying product
  4. substantial impact on commerce in the tied product market
38
Q

Price Discrimination

A

selling goods of like grade and quality to different buyers at different prices without justification where competitive harm results

39
Q

Requirements contract

A

a seller agrees to supply all of the buyer’s needs or a buyer agrees to purchase all of a sellers output or both

40
Q

Group boycotts

A

an agreement among traders to refuse to deal with one or more traders

41
Q

Monopoly

A

market power permitting the holder to fix prices or exclude competition

42
Q

Test of a Monopoly

A
  1. the possession of monopoly power in the relevant market and…
  2. the willful acquisition or maintenance of that power as distinguished from growth or development as consequence of a superior product, business acumen or historic accident
43
Q

Oligopoly

A

an economic condition in which the market for a particular good or service is controlled by a small number of producers or distributors

44
Q

defenses to a monopoly

A

innocently acquired via “superior skill, foresight, or industry” that is monopoly was earned. sometimes a monopoly maybe thrust upon the monopolist because the competition failed or because of natural monopoly conditions where the market will support only one firm or where large economies of scale exist

45
Q

market power

A

above 70% typically suffices to support an inference of monopoly power

ability of a seller “profitably to maintain prices above competitive levels for a significant period of time”

46
Q

8 advantages to mergers

A
  1. permit the replacement of inefficient management, and the threat of replacement disciplines managers to be more productive
  2. may permit stronger competition with previously larger rivals
  3. may improve credit access
  4. may produce effaces including economies of scale
  5. frequently offer a pool of liquid assets for the use in expansion and in innovation
  6. offers tax advantages
  7. growth by merger is often less expensive than internal growth
  8. help satisfy the personal ambitions and needs of management
47
Q

6 problems with mergers

A
  1. too much power is being concentrated in too few hands
  2. may trigger a merger movement among industry competitors
  3. higher market concentration may lead to higher prices
  4. innovation may be harmed
  5. some companies are so larger that they can significantly shape political affairs
  6. some companies may have become so large that we cannot allow them to fail
48
Q

3 types of mergers

A

Horizontal: firms that are in direct competition and occupy the same product and geographic markets
Vertical: 2 or more firms at different levels of the same channel of distribution
Conglomerate: involves firms dealing in unrelated products

49
Q

describe a horizontal merger

A

direct competitors seek to join together

  1. coordinated effect/collusion: will the merger facilitate cooperation so that the parties might fix prices, reduce output, reduce quality, or otherwise cordinate their activities rather than competing against each other
  2. Unilateral Effects: will the merger allow a firm to unilaterally raise prices, resist output, or control innovation
50
Q

describe a vertical merger

A

an alliance between a supplier and a purchaser

51
Q

Conglomerate

A

a merger between firms operating in separate markets and having neither buyer-seller nor competitive relationships with each other

52
Q

2 defenses to horizontal mergers

A

Failing company doctrine: permits a merger to preserve the assets of a firm that would otherwise be lost in the market
Efficiencies: desirable economic results as economies of scale or reduced transportation cost as a result of a merger

53
Q

Responded Superior

A

let the master answer. Doctrine holding employers liable for acts committed by employees while in the course of employment

54
Q

difference between employee and independent contractor

A

degree of control is the dominate test

where an employer controls or has the right or ability to control the workers performance, the worker is likely to be considered an employee

55
Q

what is necessary for employers to be liable for the act of their employee for intentional or negligence

A

causes harm to a 3rd party or for careless training and supervision

employer is liable on negligence grounds for hiring or retaining an employee whom the employer knew or should have known to be dangerous, incompetent, dishonest, or the like where that information was directly related to the injury suffered by the plaintiff

56
Q

Fair labor standards act

A
  1. Establishment of a minimum wage that provides at least the foundation for a modest standard of living for employees
  2. a flexible ceiling on hours worked weekly, the purpose of which is to increase the number of employed americans
  3. child labor protection
  4. equal pay for equal work regardless of gender
57
Q

OHSA (Occupational Safety and Health Administration)

A

responsible for ensuring a safe workplace

58
Q

when can the private sector do drug testing

A
  1. preemployment testing
  2. in association with periodic physical examinations
  3. for cause
  4. postaccident
  5. follow up
59
Q

name specific laws, statutory, or constiution that protects employees from drug testing by employers

A

US constitution- 4th amendment (forbids unreasonable searches and seizures)
State Constitution- privacy protection
Federal Statutes- Could violateTitle VII or ADA
State and Local Statutes- places limits on testing
Common Law Claims- invasion of privacy, defamation, negligence, intentional infliction of emotional distress, and wrongful discharge

60
Q

when can employers monitor employees wire, oral, or electronic communications

A
  1. prior consent by one of the parties to the communication
  2. employer monitoring in the “ordinary course of business” by telephone or other device furnished by a provider of wire or electronic communication service
61
Q

Family Leave Act

A

entitles eligible employees of covered employers to take job protected, unpaid leave for certain family related or medical reasons

entitled to 12 weeks of fmla leave in a 12 month period for the birth, adoption, or foster care placement of a child, to care for a child, spouse, parent who has a serious medical condition.

Employees taking leave are entitled to reinstatement to the same or equivalent job

62
Q

COBRA

Consolidation Budget Reconciliation Act

A

requires employers with 20 or more employees to permit departing employees to retain group health coverage at their own expense for up to 18 months as long as they are not terminated for gross misconduct

63
Q

Employment at will

A

is not under contract for a definite period of time, and as such can be fired at anytime

64
Q

Explain the public policy exception for the employment at will doctrine

A

a dismissal is wrongful if it results from employee conduct that is consistent with a public good or the public interest as expressed in legislation, constitutional protections and the like

65
Q

Civil Rights Act of 1964- Title VII

A

Forbids discrimination in employment on the basis of race, color, religion, sex or national origin

Private clubs and religious organizations are exempt

Forbids discrimination in hiring, firing, and all aspects of the employment relationship

66
Q

What are 3 types of employment discrimination

A

Disparate treatment
Disparate impact
harassment

67
Q

What is necessary for disparate treatment

A 
Plaintiff Belongs to a protected class
plaintiff applied for a job for which the defendant was seeking applicants
plaintiff was qualified for the job
the position remained open, and the employer continued to seek applicants
68
Q

what are 2 defenses to disparate impact

A

job relatedness

consistent with business necessity

69
Q

name 3 exceptions to title VII

A

seniority
employee testing
bona fide occupational qualification

70
Q

what is bona fide occupational qualification

A

a defense in a discrimination claim where the employer argues that a particular religion, sex, or national origin is a necessary qualification for a particular job

71
Q

explain the 4/5 rule

A

if the selection rate (such as the percentage passing a test, being hired, or being promoted) for any protected class is than 80% of the selection rate for the group with the highest selection rate, then the employment practice in question will be presumed to create disparate impact

72
Q

does title VII prohibit discrimination based on sex

A

yes

73
Q

what does PDA protect

A

requires that pregnant employees be treated the same as all other employees with temporary disabilities. An employer should not ask job applicants about pregnancy, and applicants have no duty to reveal that pregnancy. Nor can a pregnant employee be forced to take time off or be forces to quit due to pregnancy

74
Q

Equal Pay Act of 1963

A

forbids discrimination on the basis of sex by paying wages to employees of one sex at a rate less than the rate paid to employees of the opposite sex for equal work on jobs requiring equal skill, effort, and responsibility and performed under similar working conditions

75
Q

exception to equal pay act

A
  1. seniority system
  2. merit system
  3. a system that measures earnings by quantity or quality of production
  4. a differential based on any factor other than sex
76
Q

2 types of sexual harassment

A

Quid Pro Quo: this for that, sexual favor in exchange for keeping ones job

Hostile work environment: a work place rendered offensive and abusive by such conduct as sexual comments, pictures, jokes, sexual aggression, and the like where no benefits are gained

77
Q

what needs to be proved for disparate treatment and impact (prima facia case)

A
  1. belongs to a protected class
  2. applied for a job in which the defendant was seeking applicants
  3. qualified for the job
  4. denied the job
  5. position remained open
78
Q

Affirmative action

A

a government or private sector program, springing for the civil rights movement, designed to actively promote the employment or educational opportunities of protected classes rather than merely forbidding discrimination

79
Q

ADA act

A

includes everyone wit precieved disabilities

80
Q

drug free work place of 1988

A

Applies to employers who have contracts of $100,000 or more with the federal government or receive aid from the government

employers are required to develop an anti-drug policy for employees. They must provide drug free awareness programs, acquaint employees with available assistance for those with problems, while also warning them of the penalties that accompany violations of the policy.

81
Q

exceptions to ada

A

undue hardship

82
Q

what is the defense to discrimination based on religion

A

if it creates an undue hardship- an unreasonable burden- on the work place

Corporate, Legal and Ethical, Responsibility (5 decks)

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