Corporate Governance Case Study Question

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The Assignment
The 2007-2009 global financial crisis led to widespread financial distress or failures of both financial and nonfinancial firms across countries such as Italy, Spain, US and UK with huge effects on entire economies [International Monetary Fund (IMF), 2012]. The crisis was primarily blamed on failures in corporate governance, particularly the monitoring lapses by corporate boards and institutional investors (see Walker, 2009; Kirkpatrick, 2009; United Nations, 2010). The notion that corporate boards and institutional investors can be effective monitors of executive managers and enhancing the organisational outcomes (e.g., performance, disclosure, executive compensation, sustainability, etc) and ensuring the survival of firms has been substantially investigated in the corporate governance literature.

THE REQUIREMENTS
You are required to critically evaluate the notion that corporate boards and institutional investors are the most important corporate governance mechanisms in the firms with important implications for the sustainable long-term success of the firm. Your evaluation must draw from both the relevant theoretical and empirical literature, supported by relevant real-life case studies you have come across in your reading. In developing your critical evaluation, you must address, among other issues you might consider important for your evaluation, the following: 1. A clear discussion of the expected role and importance of each of the two corporate governance mechanisms in the firm. This discussion must include best practice guidelines or requirements as provided in corporate governance codes or regulation around the world as well as suggested in the literature. 2. A critical evaluation, using appropriate literature sources, of the effectiveness of each corporate governance mechanisms in enhancing organisational outcomes (e.g. performance, disclosure, executive compensation, etc). In addition, your evaluation must make use of insights generated from real-life case studies, newspaper reports, and any other materials you consider appropriate (Important note: the idea is not to provide a literature review and/or to describe the case studies, but to apply the insights and the evidence in supporting your critical evaluation). 3. A conclusion pulling all the key issues together, with recommendations on improving the quality of corporate governance.

 MARKING GUIDE
Marking will focus on your understanding of corporate governance mechanisms and their importance, and most importantly, on the quality of critical evaluation undertaken and the extent to which you use insights from the literature and real-life cases to illustrate effectiveness or ineffectiveness of the corporate governance mechanisms. You also should provide a reference list of all the materials you have used in the report. The marking grid used is included in this document Click to edit Master title style What I will be looking for? You might consider defining corporate governance, thinking about importance, etc--Draw from theory, e.g., agency theory–a discussion of the concept of separation of ownership and control—what agency problems arise from separation of ownership and control; what are the mechanisms designed to address these problems Consider the role of corporate boards and institutional investors in corporate governance and how effective are they (e.g., on organisational outcomes), for example,  boards of directors--What do they do—what are the roles/responsibilities of boards in corporate governance—strategy, accountability, monitoring, policy formulation (see matrix in Tricker 2012); What are the structural attributes that are considered important for boards to be effective? (consider best practice recommendations; theoretical basis)  Institutional investors—what are these and why are they considered important in corporate governance; are they effective in their roles?

 ***IMPORTANT NOTE: THIS IS A CRITICAL EVALUATION USING APPROPRIATE THEORETICAL AND EMPIRICAL LITERATURE, AND REAL-LIFE CASES***
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