Corporate Governance

Only answer 4 of the 6 questions
Font: Calibri Size 12
Spacing 1.5
The prescribed text book: Tricker, B 2015, Corporate Governance: Principles, Policies, and Practices, 3rd edn, Oxford University Press.
(If necessary, earlier editions (or international versions) of this textbook can be used, but doing so may be disadvantageous because the examination is based on the listed edition of the textbook.)
Useful material:
ASX Corporate Governance Principles (preferred for Australian students) OR
OECD Principles of Corporate Governance (preferred for International students)
Question 1
a) ‘Today, the way companies are governed has become more important than the way they are managed.’
Discuss the distinction between governance and management using examples from an organisation you are familiar with.
(10 marks)
b) ‘Although company law varies from jurisdiction to jurisdiction, the essence of directors duties are common.’ Discuss the main legal duties and responsibilities of a director of a company using examples from an organisation you are familiar with.
(10 marks)
Question 2
a) ‘The Sarbanes-Oxley Act of 2002 is probably the most influential piece of company legislation in the world to date.’ Discuss this statement, using examples of corporate governance failure that led to the introduction of this influential legislation.
(10 marks)
b) Outline Agency theory and Stewardship theory and discuss whether these two theories are in conflict or provide different, but valuable perspectives, on the important issues associated with corporate governance. Use examples to support your answer.
(10 marks)
Question 3
a) ‘The board has two fundamental responsibilities; to ensure compliance and to improve organisational performance. However, such responsibilities have the potential to conflict with each other.’
Discuss how a board should undertake these responsibilities and how conflict between the two objectives can be best resolved. Use examples from your work experience to support your answer.
(10 marks)
b) ‘While the legal basis of the board derives from the shareholders, a board can be influenced in a number of ways.’ Discuss how a board may be influenced when exercising its governance powers using examples from organisations you are familiar with.
(10 marks)
Question 4
a) ‘Directors possess various personal attributes and competencies that can assist a board function efficiently and effectively.’ Outline important contributions directors can make to enable a board to function effectively. Use examples to support and justify your answer.
(10 marks)
b) ‘An important development in corporate governance has been the increased role of board committees.’ Explain the role and functions of these committees and discuss why their roles have become important in corporate governance. Support your answer using an organisation you are familiar with.
(10 marks)
Question 5
a) ‘Along with the demand for greater transparency, corporate boards face more complex oversight challenges. Building an effective board has become essential to company success.’ Using examples from organisations you are familiar with, discuss the key characteristics of an effective board.
(10 marks)
b) ‘The Global Financial Crisis led to a new emphasis on corporate risk.’ Discuss what is meant by corporate risk and explain how the board of a corporation attempts to deal with such risk. Use examples to support and justify your answer.
(10 marks)
Question 6
a) The vital question for corporate governance, as posed by the famous American economist, Milton Friedman is – ‘What responsibilities does a business have?’ Outline your views in response to this key question. Where possible, provide examples from your working experience to support your answer.
(10 marks)
b) ‘Unitary boards with both executive and independent outside directors, are responsible for ensuring both the performance and conformance of the enterprise. It has been suggested that this means the unitary board is effectively marking its own examination papers.’
Discuss the merits of this suggestion and provide ways of overcoming any potential difficulties for corporate governance. Support your answer with examples from an organisation you are familiar with.
(10 marks)