OLD (Pre-Period 35) Topic 17 Corporate Governance - RESUBMISSIONS ONLY

@Eena - some brief comparisons perhaps but stick to the main focus of relationships with stakeholders and shareholders (and assessing the quality of the CG overall). You can use up-to-the minute info and consider its implications. Remember it is your commentary and critical evaluation based on available evidence that is most important - so don't get bogged down in unnecessary detail unless it advances your arguments or adds 'value'

@trephena Thank you for your replies. I have now moved into the stakeholder section of my project and I have chosen three groups to focus on due to the word count restriction. My choices are 1- SHAREHOLDERS 2-CUSTOMER 3-SUPPLIERS. I was hoping you could comment on whether these choices are suitable ? Morever, I have catergorised them under the Mendelow framework and my doubts are on whether placing suppliers in the 'high interest low power' and the other two groups as 'high power and interest' is the correct move? Thank you once again

@Eena - yes those 3 are fine but you should look a little at the employee and employer relationship too (look at my recent posts on T20 on this as there is a bit of an overlap between the T20 ans T17 in places). Suppliers definitely have low power in many situations particularly when it comes to relationships with supermarkets. The importance of the supplier's main customers to its business will be critical and will therefore dictate the level of their interest. Again for most suppliers to supermarkets the supermarket will be their principal customer, so yes the supplier interest will be high. Comment on the power imbalance i.e. suppliers are in the very much weaker position! (and Tesco has not historically dealt very fairly with its suppliers)

@Trephena - Tesco's annual report for y/e 28th Feb 2015 uses 2012 CG code instead of the most recent 2014 version. This is despite the code specifying that only annual reports prepared before Oct. 2014 must comply with the old version. Question - For the part where I need to briefly mention whether the company is in compliance with the code, should I use 2012 as benchmark or 2014 code? If former, for consistency sake, should I use the same code for its competitors? And is it worth mentioning that Tesco should have used 2014 code? Many thanks

@Sonu - I could be wrong but I think if you look at the FRC preamble to the 2014 Code you will see that it applies to reporting periods that START after Oct 2014. Tesco 's 2015 FS run from Feb 2014 so the 2012 Code in that case would still be applicable. You could comment on any significant differences that the 2014 Code might have made to Tesco if they had applied it. (If I have read the rules wrongly please let me know as I don't have the 2014 Code to hand - I am just recalling what I believe I read a few months back) :-)

@Trephena - I stand corrected! Glad I checked this now before it was too late. Thanks very much.

@Trephena - Having read through this thread, I have made changes to my objectives to try and make them more meaningful and analytical. I need reassurance that my draft list below is not too far fetched and disconnected (esp. No. 3) 1. To assess the quality of corporate governance within Tesco plc 2. To evaluate the impact of Tesco's corporate governance on its key stakeholders. 3. To what extent (or lack thereof) has the UK CG code developed to tackle the turbulent business and economic environment. 4. What role (if any) has UK CG code played in the corporate governance failure of Tesco plc. 5. To develop my business analytical skills I just need to know whether I am headed in the right direction. Many thanks

Essentially, in my paper I do not want to limit my focus on Tesco's quality of CG but also look at how underdevelopment of UK CG code is also to blame for the corporations taking an easy way out in complying with the letter of the code rather than the spirit. But, my apprehension is whether by doing this I am steering away from the main topic and setting myself up for failure. Thanks ever so much.

@Sonu - In my role as Forum Moderator I am here to suggest ways to pass your RAP so my advice is that you really do need to focus on Tesco and the quality (or lack of it) of their CG for your RAP. Although you may do some discursive commentary looking at whether the CG code is relevant or tends to encourage a 'tick box' approach, try to show this predominantly in the context of Tesco (although you could bring in some other brief examples of this in other companies). Overall your marker will be looking to see that you have correctly and appropriately interpreted the project brief. If they end up concluding that your RAP is more about whether the CG Code serves a relevant purpose and the spirit of Cadbury etc has been circumvented they are likely to fail it. It is a case of balance - discussion of some of your proposals could well bring up your grade (as it falls within critical thinking - what markers like to see in work) but it is a case of not overdoing it. I do appreciate though that exploring these other issues is probably far more interesting than doing the stakeholder analysis part for example.... :-) So regarding your research proposals above I would suggest you work towards 1. 40% 2. 40% 3. 10% 4. 10% 5. This is something that is more personal and it would be appropriate to use it as the foundation to your SLS self-reflection From my personal perspective I think you have raised some very valid and interesting ssues and these might be something that you might like to pursue further if you did some post-graduate study. :-D - Trephena

i have been through this forum for sometimes and i find it interesting..am currently working on rap on T17.i have been stock at the accounting/business techniques in part 2..i am based in nigeria an am working on bank..in nigeria there are two codes vis the cbn code of corporates governance for banks and discount houses and nigeria SEC code of corporate governance for listed coys..can i used both or any of this code as an accounting/business techniques..or which particular accounting/business model can be applicable for this topic cos i have been wandering for some weeks now dont know what to do...though am aware of mendalow matrix...i need more accounting/business model to work with..pls i need your advice... secondly still on accounting/business technique thing,can i used the principle of CG such as accountability,disclosure,transparency etc as an accounting/business techniques?or is there any other principle you can recommend apart from this. Thank you

@segem - the codes in essence form the business techniques and the Mendelow matrix is appropriate for stakeholder analysis. In principle there is no reason why you cannot use the codes you have mentioned however the over riding consideration should be best practice. In this respect Transparency International has serious concerns about the level of corruption in some countries and unfortunately Nigeria has never ranked well in their Corruption Perception Index over the years and this has been a cause for concern -see the attached https://www.transparency.org/news/feature/nigerias_corruption_challenge I think this offers you a unique opportunity to consider the potential effect of corruption in the banking sector. So possibly you might like to bring in some of these aspects into your RAP and mention legislation from other countries that might benefit your company were they to be implemented in Nigeria -I am thinking here of the UK Bribery Act 2010 and the U.S. Foreign Corrupt Practices Act 1977 As with Sonu above do focus principally on the main brief of quality of CG and stakeholders but you could do a similar split to the one I suggested there with 10% weighting given to the problem of corruption in Nigeria and 10% to an assessment of the perception of corruption that exists in the banking sector in general and your company in particular and whether their practices would fall on the right side of the legislation mentioned or how adoption of similar laws would strengthen the integrity of the company. I think this could add a new dimension to your work and introduce some critical thought (so beloved and desired by markers) You can outline the principles you mention and in fact that is where you can perhaps introduce the corruption issue

@trephena thanks for the reply..I still need further clearification on something's like what do you mean by a main brief?does a main brief also mean the same thing with a literature review within context of this rap..you also talked about the weighting thing.do you mean the amount of level of write up to be made as part of the discussions at the starting of part 3 or i don't seems to understand. You talked about the UK anti bribery act and law in the US,but considering the fact,Nigeria aslo had some anti graft agency such as the EFCC and ICPC couple with some anti bribery laws.don't you think I should limit myself to this local laws to discuss the corruption thing. Thank you

@trephena Tesco's major shareholders combined percentage seems to be only 12.008%, I am confused as to whether these are the institutional investors. if the percentage is this, how can we say that they have power? Morever I am having trouble narrowing down what to focus on when it comes to the stakeholder part of my project. Please guide me :)

@trephena,you talk about diagram,charts and tables in previous post with Alfred.the coy I am using does not provide any diagram,charts,or table of any form,but there are information as regards other things such as board composition,no of NED and EDs etc with this statistical information can I come up with diagram like pie charts,tables,etc but will be based on the statistical information provided by the coy on its website /annual report and the coy website,annual report as the source will be referenced accordingly..what do you think?

@segem Yes do use local laws and consider whether they are perceived as effective and have influential they have been generally and specifically on the bank. The brief relates to the main title and yes I was referring to Part 3. The reader needs to see that you have mainly concentrated on quality of CG and the stakeholder analysis aspects. However as corruption could be a particular issue in Nigeria it would be appropriate to over this a little and certainly as I mentioned adds to the value of your work through critical thought. So weighting are not the exact number of words bit a roughly as a guide. Yes try to do pie charts for internal stats if they lend themselves to this (basically to show proportion of a whole). and maybe bar charts for pay comparisons with another bank and that sort of thing. Just remember graphs etc. save on words and enhance the appearance of work.

@Eena - very interesting stat - in that case look at prior years and look at the change. Institutional shareholders have probably been divesting themselves of their shareholdings as did Warren Buffett after the scandal broke. You could (and probably should) research the latter i.e WB and how lack of CG has affected confidence of institutional investors and impact on share price

@trephena,thks a bunch your response has been informative.can i used two different codes to butress my point on the quality of CG of my potential coy..my challenge is,this two codes has signficant similarities but few differences.. i want to research on a bank and and the bank in question is a quoted coy..firstly,there is code of CG issue by the central bank of nigeria for banks and also there is another code of CG issue by the Nigeria sec for listed coys..pleaase can i use this two codes or use anyone out of the two as benchmark to assess the qulaity of CG in my potential bank. Thank you

@segem - I suggest you pick and choose the best bits of each Code as the overall aim is too assess the quality of the company's CG. You should try to make some comparisons with another bank at least when looking at the composition of the Board and directors pay etc. If all you do is only benchmarking to one code your analysis would only be 'one dimensional'.

@trephena Yes Many of them cut their stake or sold off completely. The biggest problem now is what to include in my content of conclusion and recommendations. I seem to have just one broad opinion that Tesco from here on out should give significance to the substance over foram of complying to these codes. So far the new leadership has made difficult but yet much neded decisions which seems to slowly pull tesco back upz I do not know any specific recommendations i can to advise as I feel my view is limited. What course of action do you suggest i carry on moving forward with the conclusion. My word limit is almost 6900 now Eena

@Eena - you have to reach a conclusion on the quality of Tesco 's CG based on the evidence you have found in your analysis. For help with recommendations see https://www.applied-corporate-governance.com/best-corporate-governance-practice.html The total wordcount from coversheet to end of recommendations and conclusion is 7,500 so don't think you have a real problem

@trephena,I check the link you share with Eena, but it was about the principale of CG...how can one really applies those principle to make a meaningful conclusion and recommendation. Or is it possible to formulate principles of CG from the culture,mission and vision of a coy and if it is possible to formulate such,how can one apply it to assessed the quality of CG for the purpose of making conclusion and recommendation. Segem

@segem -scroll down to the Golden Rules section -these are intended to help with recommendations an area Eena was struggling with. As your second paragraph suggests good CG should be tailored to the culture and stakeholders rather than ticking just boxes for a Code. Tesco is a prime example of this (Eena is doing Tesco) - their 2014 CG statement was all about how they had complied with the Code etc but the reality was that they had not complied with accounting standards and had engaged in questionable ethical practices that in the end have not benefitted shareholders and suppliers and have impacted badly on employees (caused lots of job losses) as customers have lost trust and gone elsewhere.

@trephena,does this topic require any form of literature review,like theories of CG,background info of the company,etc

@segem Yes in Part 2 you should do something on Cadbury and the history of CG -maybe a little on agency theory and what the Codes hoped to achieve. You can then return to this in your Conclusion on whether CG via the Codes has succeeded in achieving the objectives envisaged

@trephena,under what subsection will that be in part 2,am planning to write base on the local code here in nigeria,so why cadbury?i thought even if am gona write something about cadbury and history of CG,it should be in part 3,because everything under part 2 relates to information gathering, limitation,ethical factor and business model

@segem - Part 2 sets the scene for your information gathering so you need to cover the background of the history of CG (briefly) and its influence on subsequent codes. CG is an evolving discipline and I think you will find that most Corporate Governance systems worldwide were influenced by Cadbury 1992 (and successive reports such as Greenbury, 1995) which preceded the OECD CG principles and certainly influenced it and King 2002. The Nigerian Code came after these and no doubt in the banking sector there was some pressure from the World Bank for the CBN to abide by an appropriate CG Code. See: https://www.academia.edu/7894231/An_analysis_of_corporate_governance_in_the_Nigerian_Banking_industry_The_role_of_Ethics PART 2 is background and theory and Part 3 is actual findings and analysis so ethics in practice in the bank would NOT go in Part 2

@Segem - the best thing you can do for yourself is to choose a multinational company for your study. My reason for saying this is because if you go to Google to search for information on those companies, you see a thousand and one sources giving you information that is different from what your case study organisation is saying. In my previous submission, I selected First City Monument Bank (FCMB) as the case study. But I had so many challenges in part 3 due to lack of independent sources of information. Our Nigerian banks are very secretive with these information and the media does not report on these issues. Ofcourse, your bank will say they are complying with the codes but without independence sources of information, you'll have no way of knowing if this is true or not. So you'll end up agreeing that they complied. Although my report is on topic 20, it's similar to topic 17 so you are likely to face the same issues I faced. And if you have the resources, contact learning luminarium to be your mentor.

@unyimeedem,thanks for the observation,but most of our banks have gone multinational in recent time.you said you used fcmb,but fcmb is a multinational with subsudiary in other africa countries and the UK..so am yet to come to terms with your assertion.what year did you write your project and which of the codes did apply,please i had like read from you. for me fcmb is a multinational and a listed coy on the NSE should have enough independent source of information..please let me know the code you used for your comparison. Thank you.

@trephena,are you suggesting i use any of the cadbury report and greenbury report,since you told me from our previous discussion that i can as well used the the nigeria code..please am confused. Thanks

@segem - I have said it is fine to use local applicable codes in Part 3. I mentioned Cadbury (and Greenbury) in the context of the brief outline of the history of CG that you are expected to do in Part 2 (a bit like a literary review) From the previous link you can see how CG In banking codes in your country has developed from the principles of CG proposed by the OECD which indirectly stemmed from the issues of stewardship, agency problems and accountability that Cadbury identified. As @unyimeedem has mentioned it is VERY important with both T17 and T20 that you find independent commentary on the company from sources external to the organisation you are using. This is because the markers do not want just a rewrite of the company CG statement -they expect evidence of some critical thought and a balance of opinions in students' work.