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

Hi Trephena,

I want to use the Mendelow Matrix but I’m struggling to find the original source or reliable source from which I can reference from. How best can I find information on this? It seems some information on google scholar needs a subscription

Hi Trephena,

I must first thank you and the forum for the wealth of information that is available and how helpful it is in guiding us students.

I am currently doing Topic 17 and chose HSBC as my company for analysis, I have Barclays as the comparator but my mentor said i don’t need a comparator. I read through the forum and saw that the use of a comparator would enhance the report so might still go ahead and use it.

My main struggle right now is part 3 and deciding what information from the code to use (since the code has a wealth of information and all of it seems relevant) and how to present it. I started by using a table format to state what the code says and then what HSBC’s Annual Report says. for example re the composition of the board i wrote how the ED and NED should make up at least half of the board as well as the skills and experience and the diversity in terms of male to female percentage for the code section. Can i then go on to state that i used maybe a pie chart to show the results in figures 1 and 2 below and say something brief about the skills and experience in the table? what i am asking is if i can present part of the findings in the table itself and also as a pie chart?

Secondly, should i show the findings from my independent research directly after i compare the code to HSBC, during the comparison or as a summary in the conclusion? so far i have found that HSBC’s practices as reported in their Annual Report are consistent with the code but found articles that mentioned some fines that HSBC were giving as well as them being accused of tax evasion for example. I am thinking this analysis would serve well in the conclusion section. What are your thoughts?

Brief answer as I am on my hols 😀

Did you read my answers on p.15 &16 to arathy? BTW so far OBU has stuck to original title but you must avoid a ‘ tick-box approach’

You need to get plenty of critical and balanced evaluation into your work and as TLL say, this does not come from the annual report. Your own independent research is therefore vital.

@trephena said:

@alfred I understand your apprehension as the list I put together sounds very daunting! Great that you have done P1 so recently as if you have access to a study text or relevant material, I hope it will pinpoint most of the relevant bits of the CIty Code for you so that should take some of the hard work out of it for you (and also explain Mendelow and other possible models) 😀 .

You may certainly use a UK company. Choose a plc as by law (the Companies Act) they have to put most of the information I have mentioned in their annual report either directly or indirectly. For example they normally have background details of their directors, their remuneration packages (as shareholders normally have to agree these) and pictures of them (so you can see if they have any women directors or not), the audit report shows the date the auditors sign off the accounts (so you can take the following day as the day they published it) etc. So you need to download a few annual reports to see what is in them before you take fright!

I don’t normally like recommending a particular company as I always feel that a student should choose one that interests and appeals to them, however to see for myself what sort of information is easily accessible I have just done an online search for Mark and Spencer with the link:

https://annualreport.marksandspencer.com/

This link helpfully provides further links to the full annual report and there is even a specific quick link to the Governance section and Remuneration Reports so for this company it is easy to find most of the information that you will need. (Comparators for M & S would be Debenhams, House of Fraser or Next plc).

If I were doing Topic 17 myself I would chose one of the banks as they have in the past few years been seriously falling down on governance issues (and I would enjoy the challenge as a forensic accountant of delving into the ‘darker side’ of their operations! 🙂 This is what I mean by choosing a company that interests you – I would find M & S OK but Barclays, HSBC, Lloyds etc personally very exciting as I know some of the banks, in spite of trying to appear ‘shiny’ in their annual reports, have indulged in ‘dark deeds’ in the last 5 years or so, that in some cases is only just coming to light)

However you must also use other sources to balance up your report – such as the financial press and reuters or the BBC – here are links to the Daily Telegraph & BBC news finance pages: https://www.telegraph.co.uk/finance/
http://www.bbc.com/news/business/

You use the company information to compare governance facts (to the Code and with the comparator) and external sources to research more objective things to form an opinion on whether the board is acting ethically and to discover what shareholders and employees and suppliers think of the company. This part is obviously more difficult but you will need to search the external sources for relevant articles and information that may give you ideas and lead you to aspects of this.

You certainly have time to produce a good quality report for the Period 29 submission in November depending on exactly what your other commitments are. I normally think 3 months is about right for a good RAP that should more than adequately meet the assessment criteria if the student puts in the effort and appreciates and understands all of the rules and requirements.

Please read our forums on Referencing as Referencing is an area of frequent failure for the RAP and if you are aware of the rules you should learn to incorporate the principles of it in your work from the beginning. Somewhere students have posted details on the forums of how Microsoft Word will construct a reference list for you, which takes out a lot of the hard, boring work normally involved in this. Don’t just read the OBU Info pack once, ensure that you refer to it regularly and think about the SLS at the beginning NOT the end as it makes it much easier to produce a good SLS if you think about it and start planning it early. 😀

Great information @trephena tnx

The topic title is ‘Quality of Corporate Governance…..’ therefore although you will mainly be expected to use the UK code it may be appropriate to refer to Sarbanes-Oxley legislation in relation to the U.S. subsidiaries.

Use n.d. as you have no idea when it was written.

If you have done calculations and graphs normally you would do this via Excel (or something similar). The requirement for passing criteria 7, IT, is that you produce the spreadsheet relating to this. If it was some other software then you should upload evidence of this as the marker will be left wondering where on earth the charts came from and how did you do them?

As you have created the graphs yourself stating the source would be adequate for charts and graphs.

With Excel on the home page in the number section there is the option where it shows .00 and underneath ->0 (arrow zero) if you click on this after highlighting the cell it reduces the decimal places and the other button <- increases them. (You can set up the percentage initially be clicking on the % sign)

Hello, has anyone come across any stats what is the rate of success for shareholders voting against directors in the UK? For example, Legal & General say they voted against 89 UK board directors in 2016. Are there any stats how many directors are not re-elected?

@trephena said:
FOR T17 SUBMISSION CHECKLIST PLEASE SEE PAGE 12

-then scroll down.

I wrote this checklist for a previous submission period but the checklist is still valid for P34

As a consequence of the change in title for Topic 17 I shall open a new Forum a topic for it.

If you are resubmitting under the old P34 title continue to post here but please use the new forum topic which I am calling ‘Corporate Governance (T17 NEW submissions from Period 35’ if you are attempting under the new title.

(Note some of the info and ideas on this old T17 forum may still be relevant as I have talked about scandals – these would mostly be in the second half of this forum and therefore it may be worth reading through from the end and working backwards by page)

Sounds like your ACO offence was a relatively minor infringement of the rules as otherwise you have do a completely new report on a different topic or company.

I would take it that in your scenario:

1. This would be fine as it is being treated as a normal resubmission

2. You would be subject to the new rules as the company has been changed

Hey , sure yes. Please ask