Dear all, may I ask if “The Corporate Governance of Listed Companies: A Manual for Investors” (Reading 40) is important? If yes, what are the things that I should be focusing on? It looks a bit like Ethics though. When I check the end of the chapter it only has four practice questions and no summary. Does this mean that this chapter is negligible? Thank you!
ANYTHING in any reading is fair game. What can be tested isn’t driven by how many practice questions, but by the LOS. The LOS should always be your guide. Trying to guess what’s likely to be tested is a fool’s errand. The LOS for this reading are:
a. a define corporate governance;
b. describe practices related to board and committee independence, experience, compensation, external consultants, and frequency of elections and determine whether they are supportive of shareowner protection;
c. describe board independence and explain the importance of independent board members in corporate governance;
d. identify factors that an analyst should consider when evaluating the qualifications of board members;
e. describe responsibilities of the audit, compensation, and nominations committees and identify factors an investor should consider when evaluating the quality of each committee;
f. describe provisions that should be included in a strong corporate code of ethics;
g. evaluate, from a shareowner’s perspective, company policies related to voting rules, shareowner sponsored proposals, common stock classes, and takeover defenses.