(Archive) T17 Corporate Governance

One of the major initial problems about the new topic is selecting a suitable company. I think you need to find a company that has at least one major issue and argue that well by looking at the problem from several angles. Normally you can then find a couple of minor issues that can be used to make a further case of weak corporate governance.

For example there are many instances in the UK about excessive executive pay and shareholder revolt -see businesses pages of major media as every week (and in fact almost every other day) a new case is reported. To develop the argument consider the following article by the High Pay Centre https://highpaycentre.org/pubs/are-remuneration-consultants-independent
which considers whether remuneration consultants are truly independent. The executive pay (the total compensation package) in your chosen organisation could be compared with increase in shareholder value / profits, average worker pay, dividends as a measure of what the CEO is objectively contributing (or not as the case may be)

The purpose is to build up a well researched argument with some critical thought involved and bringing in objective evidence like this shows you have considered the topic in a ’rounded’ as opposed to superficial way.

The study could be combined with an investigation/research into other areas where there may be potentially weak governance e.g. one of the on-going issues is number of women on boards (considered to add strength to a board as females dilute the ‘alpha male’ mentality and take a more balanced attitude to risk). Or there might be issues of zero hours contracts and dubious other practices.

Adopting this type of approach (taking the major issues and subjecting them to balanced scrutiny) if adequately researched, well presented and referenced should lead not only to a pass but probably a B grade or above.

In the UK most of the major banks continue to have ‘issues’ of one sort or another -HBOS (now under Lloyds) and RBS have been accused of pushing small viable businesses into liquidation via exploitative practices and some employees face or have faced charges of corruption. Currently there are fears of another financial crash because of loose lending practices /lack of responsible lending and unprecedented levels of consumer debt and security concerns regarding customer data and bank fraud.

Overseas Swiss based ABB has had a couple of major issues -see https://www.telegraph.co.uk/business/2017/02/10/engineering-group-abb-investigated-serious-fraud-office/
and
https://uk.reuters.com/article/uk-abb-fraud-idUKKBN1610HF

Meanwhile Samsung too has been rocked by scandal
https://www.bloomberg.com/news/features/2017-07-27/summer-of-samsung-a-corruption-scandal-a-political-firestorm-and-a-record-profit

Just a few possibilities here then for a good and interesting RAP on new Topic 17

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

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)!

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

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 !!!!! 🙁

@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.