Corporate Governance Take Home Exam
António Nogueira Leite
1H1S 2019/2020
The take home exam answer has a size limit of 3 pages, letter size 12, line
spacing 1,5. Please submit your individual exam in Moodle (Word file).
1.
(35%)
Explain how sound corporate governance can make it more difficult for
companies to fail, clearly explaining what ‘corporate governance’ means in your
answer.
2.
(65%)
The Wannabe Investment Partners (WIP) monitors the performance of all the
quoted companies in which it holds equity shares. Decisions about buying,
holding or selling shares are based partly on reports by its analysts. The head
of department is meeting a newly appointed analyst to explain the aspects of a
company’s performance that are of particular interest.
He says that it is obviously important to look at all financial reports issued by the
company, including the financial statements in its annual report and accounts,
and it is also important to look for information about the company’s business
strategies and future prospects. He then adds that WIP attaches great
importance to corporate governance, and would not be inclined to invest in
companies with unsatisfactory corporate governance. The newly appointed
analyst replies that he was not required to consider governance issues in his
previous job as credit analyst for a commercial bank, and he wants to know
more about what aspects of governance should be included in the reports that
he prepares on companies for his superiors.
Identify the corporate governance issues that should be of interest to an
institutional investor in equities, and explain why these issues may be of
particular interest to the fund managers of WIP.