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

Question

1. The Sarbanes-Oxley Act was a response by Congress to an array of high-profile U.S. business scandals at the beginning of the 21st century.
2. Using cash from newer investors to pay off older ones is known as a Kohlberg scheme.
3. The first stage of personal moral development is known as the conventional level.
4. Personality tests can be used to identify potentially dishonest people before they are hired.

Answer 1

1. True
At the beginning of the 21st century, U.S. business erupted in an array of scandals represented in such names as Enron, WorldCom, Tyco, and Adelphia, and their chief executives went to prison on various fraud convictions. Executives’ deceits generated a great deal of public outrage, as a result of which Congress passed the Sarbanes–Oxley Act.
2. False
A Ponzi scheme is using cash from newer investors to pay off older ones.
3. False
Psychologist Laurence Kohlberg has proposed three levels of personal moral development: preconventional, conventional, and postconventional. At level 1, preconventional, people follow rules.
4. True
Companies try to screen out dishonest, irresponsible employees by checking applicants’ résumés and references. Some also use personality tests and integrity testing to identify potentially dishonest people.