Answer the following statements true (T) or false (F)

Question

1. Andrew Carnegie, steel magnate and supporter of free libraries, is an example of a philanthropist.
2. The majority of American adults are likely to purchase from companies with ethical business practices only if their prices are not higher.
3. It is still unclear whether ethical behavior and social responsibility give an organization a competitive advantage.
4. Having a Board of Directors whose outside membership is chosen by the CEO or works closely with the company itself strengthens corporate governance.
5. Shareholders of Chesapeake Energy sued the company, demanding corporate governance reforms.

Answer 1

1. True
“He who dies rich dies thus disgraced,” 19th-century steel magnate Andrew Carnegie is supposed to have said, after he turned his interests from making money to philanthropy, making charitable donations to benefit humankind. Carnegie became well known as a supporter of free libraries.
2. False
A survey of 2,037 adults found that 72% would prefer to purchase products and services from a company with ethical business practices and higher prices compared with 18% who would prefer to purchase from a company with questionable business practices and lower prices.
3. False
Ethical behavior and social responsibility are more than just admirable ways of operating. Evidence supports that they give an organization a clear competitive advantage.
4. False
Corporate governance is the system of governing a company so that the interests of corporate owners and other stakeholders are protected. If the outside directors have been handpicked by the CEO because they are friends, because they have a business relationship with the firm, or because they supposedly “know the industry,” the board of directors may fail to be tough on the CEO when he or she asks for leeway to pursue certain policies. Better separation results in stronger corporate governance.
5. True
Big shareholders sued Chesapeake for what they considered an irresponsibly generous 2008 compensation package to McClendon and demanded that the company overhaul its compensation practices. In the resulting settlement, the company agreed to some compensation and corporate governance reforms, including the hiring of an independent compensation consultant and a majority vote for election of board members and a so-called lead independent director.