Tutorial 7 Answers

Tutorial 7 Answers - Tutorial 7 Answers 1. E- Reading 3,...

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Tutorial 7 Answers 1. E- Reading 3, p187 Case Study 6.2 Q 1 - 5 1. This article discusses the use of ratings by Standard & Poor’s to assess corporate governance for individual corporations. What aspects or practices do you think would or should be examined to determine the standard of corporate governance for a company? Most rankings systems would be expected to be based on the principles of corporate governance codes  and good practice guides.  Specific examples of what may be considered in such ratings include: Is their an audit committee?  Is its membership appropriate?  How often does this meet?  2. Research undertaken has argued that using formulas or scorecards to rate corporate governance is not appropriate. Can you see any problems or deficiencies in using a numerical ratings system to assess corporate governance? The problems with any numerical ratings systems are that it reduces corporate governance practices to  one overall number. Corporate governance practices by their nature are not like ‘profit’ that can be  measured numerically.  For example, how do you balance  numerically the  following: there could be larger numbers of  independent non-executive directors on the Board, however their expertise may be less overall that  another   Board   that   has   a   higher   level   of   executive   directors.   Also   how   do   you   measure   the  integrity/ethics of the individuals – if these independent directors are not conscientious or are willing  to be dominated by executive directors is the sheer number of independent directors enough to justify a  higher numerical rating.  This issue is common with any rating system that essentially reduces qualitative factors to a single  numerical figure which is then used to compare to rank. 
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3. The article notes deficiencies identified in the practices of Hong Kong companies. What business, environmental or regulatory factors would influence these practices? Regulatory factors to shape environmental performance could be:
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Tutorial 7 Answers - Tutorial 7 Answers 1. E- Reading 3,...

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