(Archive) T17 Corporate Governance

dalitso999 - please be aware there is no set layout for the new Topic 17 and the exemplars are really just extracts showing the type of style that you need to adopt. As I have mentioned previously begin with a brief introduction to CG and then outline the scandal and the issues it has caused, moving on to analyse its impact (including possibly potential financial impacts. If the scandal you are looking at revolves around inappropriate use of accounting methods contrary to the IASs then these may be used as a business technique. However as I had also tried to impress, you also need to do a full analysis of the impact of the scandal on all potential stakeholders, so you can bring in a stakeholder model. The various stakeholders affected are often much wider than just shareholders and employees e.g. the VW scandal (which overall is mainly suited to CSR rather than CG) the stakeholders extended to the wider community of the town where VW is based as the fall in demand to their cars would impact economically on the area (higher unemployment and a reduction in money entering the local economy and a reduction in demand for local services). Other appropriate techniques and models are agency theory and stewardship theory however remember that rather than just state theories you do need to be able to cite them and give examples in the context of your chosen company

Dear Trephena, Trust you are doing good. I could not submit in period 34 and working hard to be able to submit for period 35 ! I have chosen VW as my organization and the below are my project objectives and research questions which I have been working on.. Are these fine in your opinion? Project objectives To identify VW’s weak corporate governance structures; To evaluate VW’s compliance to the corporate governance practices in place; To assess the origins of the corporate governance issues and the organisation’s response; To draw a reasonable conclusion and recommend some suggestions based on overall learning from this project. Research questions What are the corporate governance structures adopted by VW and what went wrong; To what extent has VW complied to corporate governance codes adopted; How the corporate governance issues were unfolded and how did it affect VW performance; What are the major high points and corporate governance shortcomings within VW. Thank you in advance.

Thank you this will be helpful for others wondering how to approach the new topic. One area you could explore (perhaps you already intend to with "How the corporate overnance issues were unfolded and how did it affect VW performance"?) is the impact on sales globally. As the scandal took hold a few years ago you may be able to see trends in revenue (was there an immediate dip and it is slowly recovering for example?). You could also try to research whether the scandal has accelerated governments' and the market's response to phasing out diesel cars (although this latter point is more suited to Topic 20 where the main arguments are about deception and pollution/climate change. The move towards electric vehicles could be seen as a force for good and VW's response to this move could be developed in further detail).

Hi Trefena, I am new in this T17 group, I went through this forum and am thinking to go for this topic as it only needs secondly data, I have asked a question in T1 forum but after going through this topic i feel comfortable because how it is hard for me to get primary data. Do you think I can submit by p 35 as I will be fulltime on this project. Is it possible to change topic because I have selected 3 topics T1 16, 11. Thank you for your help and guidance. I feel i am on the right place

Well you only have about a month to research and write up your analysis and produce your SLS and do your slide presentation -which is quite a lot of work. Personally I don't think this is adequate to do a RAP and stand a good chance of passing especially as you have not really settled on a topic and the work always takes longer than anticipated. Remember that each submission currently costs GBP 300 and if you fail that will effectively mean at least GBP 600 (GBP 300 for P35 and another GBP 300 for P36) - as well as the disappointment involved. In my opinion you would be better off planning your work properly and doing a quality research report that has a really good possibility of passing first time.

Thank you for your advice, let me prepare for P36 then. Please If possible would you suggest for some companies. Sorry if this is not right question to ask.

I have made suggestions in my earlier posts on how to look for suitable companies and how to approach the topic. I cannot really prescribe which companies a student should use but followi my advice of looking at the business pages over the next working week or two. See which companies feature and what the key issues are. Then do some quick basic research to establish that potentially you will have a variety of sources that cover these key issues. For example today there is a further development in the Samsung Electronics saga https://www.bbc.co.uk/news/business-41604860 So Board issues and corruption here (and potentially illegal payments). In spite of the crisis, profits remain good.... (which is unusual) but perhaps these are because of strategies and decisions made in the past and now without direction at the top they are unsustainable....

Thanks Dear Trefena, I will be following the busines pages and I am sure I will come with some ideas by the next 2weeks. Even this Sumsung issue also i think will be interesting case. Stay blessed

Hey, Trephena and fellow T 17-ners I could really use some advice on the stakeholder analysis. Under business models I stated I would use Mendelow's matrix. I 'defined' it and discussed its strengths & limitations. My issue is with the quadrant and the mapping. Where do I do this? In part 2 where I discuss the matrix? If so it means in my 'impact on stakeholders' section in part 3 its a matter of stating the stakeholder and typing away all the nasty things that happened to them? I've been stuck the whole day and I'm panicky. My word count is creeping into the red.

Do the actual mapping and most (if not all) of the stakeholder impact in a section after the analysis of the weak governance. Obviously in setting out what the weak governance and scandals there may be some mention inevitably of stakeholders but try to go for one main section (potentially with sub-headings) where you have analysis of relevant stakeholders, and discussion of impact and any stakeholder reaction. Ensure that you don't ramble on when setting out the background to CG development. It should be a brief introduction to the topic and not a statement of every twist and turn! There may be some justification for setting out a timeline table for MAJOR reports and events (a) if you have the time to do it and (b) if it will save on words. Do not however paste it into your report as an image unless you include the words in the wordcount as markers do not take kindly to anyone trying to abuse and fiddle the limit by shoving things in tables unless the tables are left in Word. Otherwise try to limit the words to the minimum to get the job done - see if you can get away with 250 -300 By the way Applied Corporate Governance have produced an article on VW which may be useful (however if using it, it will need to be acknowledged and referenced) https://www.applied-corporate-governance.com/volkswagen-an-accident-waiting-to-happen.html

Thank you so muchTrephena. I think I went overboard in my evaluation in some parts. I'll have to tone it down. Another question please. Other issues outside the code that I wish to evaluate, say money laundering or senior manager regime, I have to introduce under business models first like we do for The Code & Mendelow? And then apply in part 3?

I am not aware that money-laundering is an issue at VW and therefore it would not be appropriate to bring this in (it is mostly appropriate in financial and banking organisations). Regarding Board issues: these are covered in the Code and the German equivalent, the Kodex and where the Board delegates duties to those below them, they cannot simply absolve themselves of responsibility (as responsibility cannot be delegated)!

Oopsy. Sorry I should have mentioned I'm researching into the practices of a bank.

Yes of course - I remember now (Jes Staley) - I was confusing you with another student who was doing VW. :-D

Yep! James Edward Staley the man himself. (see what he did with his initials there?) :-)

Thanks for pointing that out - something I didn't know! Mmmm could be smart but in his case could be evidence of someone on his own ego trip !!!!! :-(

HI Trephena i have also noticed a change in topic 17, im submitting this November. im having some doubts which i would be very happy if you help me clear them. i am in east Africa, there hasn't really been a specific company in my country that has been specifically identified as having a week CG structure , however i have noticed a university report here in our country which has generalized the level of CG of all companies listed in our stock exchange as being good in average but are still struggling when it comes to board structures. also a reliable newspaper article which has just generalize that we still having issues and a long way to go when it comes to CG, especially on issues of board structures as identified above and other transparency issues, all these reports haven't specifically directly addressed the company i have picked to make my RAP but rather generalized the company listed in our stock exchange on which this company is also among. My question is can i take these as arguments to proceed my RAP with? are they really enough of a reason? if not is there any other alternatives? can i proceed with those of UK? if yes would you please kindly give me some guidelines on the UK companies?as im still not that much aware of corporate stuffs happening in UK. i have written the part 1 and 2 of the RR already. the other doubt, do stakeholder analysis really is required in this new T17? do i really need to include the Mendelow matrix and the carroll csr pryramid in stakeholder analysis? as the topic has just specified to assess on CG origins issues and the organisation response. and if i was really required to make a change, considering the time remained to submitting, do you think time is still realistically with me? or i should just postpone to next submission kind regards

@ngeleja - Thank you for highlighting the issues you as an Africa student have found. have found. There is nowhere in the RAP instructions where it says you have to select a company in your own country. One of the major problems is that CG in Africa is not so well developed (apart from perhaps in South Africa, which did produce the King Reports). That is not to say there is not weak governance, however most of the scandals involve bribery and corruption. Often since government ministers themselves are involved there is not much publicity and many of the instances are hushed up. You might be able to find details regarding particular African cases if you look at Transparency International's website (TI is an organisation that is dedicated to highlighting corruption). I am not sure a generalised approach will work as you would be mainly doing research rather than adding much original analysis and critical thought of your own. The idea of Mendelow (and in fact any other stakeholder theory) is that the title specifically says that you are to consider the impact of the weak CG on stakeholders -thus providing an opportunity for you to do some original analysis to comply fully with the topic title. Therefore I would advise that unless you can find a specific African company to analyse where you can assess stakeholder impact you look at international business business pages to find an overseas company where there is more definite information available.

Hi Trephena, just to make sure I understand the new title correctly - as far as I can see, it asks for "an assessment (...) of the organisation's response", does not specifically mention the impact on stakeholders (although it makes sense to evaluate the response in terms of the impact on stakeholders, as you suggest in your posts). Please can you clarify?

'The organisation's response' will in the first instance be to defend its reaction. However if viewed objectively and bearing mind that any response will impact on stakeholders, then to bring in the critical thought element then this part will require you to consider the impact on the various stakeholder groups.

That's what I thought, thank you!

thanks trephena i have decided to re write my RAP and picked tesco, i have come to notice that Tesco had encounter lots of up and downs in 2014 on its corporate governance, however most of my sources are from BBC. will it be okey to make a citation from a single source when it comes to this particular area?

Not really as your research would be deemed too narrow. Tesco has been written about by the British press quite widely. Although you would have to pay a subscription to gain access to the Financial Times, the Daily Telegraph, Guardian and Independent newspapers usually grant some free access to most articles. I found this recent link to an article in the Retail Gazette https://www.google.co.uk/url?sa=t&source=web&rct=j&url=https://www.retailgazette.co.uk/blog/2017/06/tesco-ceo-relocation-costs-benefits/&ved=0ahUKEwj_nre8toHXAhVCElAKHffVBQY4ChAWCDowAQ&usg=AOvVaw3A0aJJS14sK5XovJzWZy1v Their is also a link there to another article about Tesco and its auditors and also a search facility on their site for you to pull up more articles about Tesco (however you will need to put in additional relevant key words otherwise the articles are likely to be on non- governance issues)

Thank you so much Trephena, thats so resourceful i have set up my research objectives which includes assessing the quality of CG against those UK guidelines also identifying the tesco's cg weaknesses and critically assess those areas where tesco has struggled to maintain an upper hand, assessing the impacts it had on its stakeholders as well as the company's response and the last one is my recommendation. does my research objectives sound fair enough? do i need to include a comparison? lets say with its competitor on its CG practices? the oher minor question, when i make a citation lets say theres this article on BBC by Kamal ahmed. do i need to write (Kamal Ahmed, 2014) or just (K. Ahmed, 2014)

Yes, your objectives sound reasonable. The new title is less 'prescriptive' than the old - by that I mean it is harder to state categorically what must go into the report. So personally I don't necessarily think you need a comparator company. In my opinion it comes down to having 7,500 words to show the examiner that you understand what the key issues were in the scandal(s) that affected your chosen organisation and to discuss the fallout from it. Try to look at the position from as many angles as possible as that will increase the critical thought behind your work. Keep up to date. For example I think the trial of 3 Tesco executives brought by the UK Serios Fraud Office (SFO) is currently ongoing so depending when you submit, this may concluded. Seems I may have been wrong about access to the FT as a source as this article is publicly available https://www.ft.com/content/97dcb050-49df-11e7-919a-1e14ce4af89b - It may be useful towards the end (last 3 paragraphs) as it mentions several issues and about how Tesco proposes to operate going forward (so helps when discussing impact). Note although PwC escaped official censure from the FRC this does not necessarily mean their conduct as auditors was exemplary but rather that a case against them would not succeed (their access to top class lawyers and the money to defend the case would far outstrip the FRC's resources!). Regarding your referencing query about Kamal Ahmed: (Ahmed, 2014) in the text and Ahmed K. (2014) in the list (you only need to insert K in the text reference if there is another source from someone else with the last name Ahmed to distinguish them from each other). Otherwise my Golden Rules in the OT Ultimate Guide on our homepage should cover most referencing issues. (Don't forget to appendage 2015a, 2015b if necessary)

Thank you so much for your assistance and for the link, opened it but unfortunately still i am required to pay for a subscription to have any access. i have started tackling my research objectives. i have come to notice that the UK CG codes change almost in every 2 years and as per the info pack im required to use at least 3 previous annual reports. will it be appropriate, lets say i make comparison of Tesco's year 2014 with the CG guidelines published in 2016?

@ngeleja A tip for the Financial Times online - keep trying! It will allow you a number of articles per day (about 3). If you have two devices the better. Sometimes I cannot access some articles with my computer but I can access the same articles with my ipad. If I reach my limit on the computer, I switch to the ipad ;-)

Thank you alejandra for that valuable tip. I think also @ngeleja it may also be influenced by ad- blocking and cookies (some sites may allow access if they can put advertisements on your screen). So if you switch off blockers via your settings you may find you can then get access.

Hi, regarding the changes in Topic 17, what is it means by 'assessment of the origins of the CG issues'? I am confused on what should I do. For your information, I already done 40% percent of the RAP but there is less than 15 days left to complete it. What do you think? Should I proceed for submission P35 or defer to P36? :(

‘assessment of the origins of the CG issues. ' Your RAP should have very briefly outlined the last 30-40 years history of CG. From some of the scandals you should be able to see some of the common threads that often initiate CG problems. These same issues are usually present today e.g. greed, lack of ethics and arrogance at board level. As some CG issues actually show the presence of fraud (all the classic cases such as in Enron, Satyam and Tesco) then Cressey's Fraud Triangle (a theory of how 3 elements faciliate fraud: pressure/ need, opportunity and rationalisation come together in most frauds) can also be used to analyse what lay behind the CG problems in your chosen organisation.