The Steinhoff signals: The role of responsible investing for asset managers

2020 ◽  
pp. 1-17
Author(s):  
Hendrik Jacobus Haasbroek ◽  
Geoff Bick ◽  
Stephanie Giamporcaro
Keyword(s):  
Corporate Governance ◽  
Boards Of Directors ◽  
Financial Analysis ◽  
Real Life ◽  
List Type ◽  
Responsible Investment ◽  
Teaching Case ◽  
Responsible Investing ◽  
Asset Managers

Subject area of the teaching case: The case can be used in the subject areas of finance and in particular investments, corporate governance, ESG, or responsible investments. It is suitable for students from all financial backgrounds, from a novice in the financial markets to an expert in finance. It is, however, expected that the class should have a sound fundamental grounding in financial analysis and valuations. The purpose of this case is to prepare students for future investments they would make in whatever capacity – whether in private or listed companies – and to prepare them for future roles on boards of directors. The examples of real-life events in this case study are used to prepare students for future similar situations in which they might find themselves. Student level: This teaching case is aimed at postgraduate students pursuing an MBA or a specialist Masters in a finance programme. This case can be used as a master class in corporate governance, investments, or responsible investments. This case is also suited for an executive education class in management. It is particularly relevant to a module that focusses on investments, corporate governance, ESG, or responsible investments. Brief overview of the teaching case: The case study chronicles meetings held on 8 November 2017 at a fictional South African asset manager, Active Investment Management (AIM). These meetings discuss the firm's investment in JSE-listed Steinhoff International Holdings. The case deals with the questions that active fund managers need to address when balancing financial analysis; environmental, social, and governance (ESG) analysis; portfolio management; and the need to comply with their fiduciary duty to clients. It also looks at the need for responsible investing in decision-making. Expected learning outcomes: The understanding of the assessment around the complexities of asset management when it comes to responsible investment. To determine why institutional investors should apply responsible investment principles when making investment decisions. An understanding of the evaluation of the unique roles of the three pillars of corporate governance, namely asset managers, auditors, and the board of directors. The ability to assess how to integrate financial analysis and ESG principles in making investment recommendations.

African Bank Investment Ltd (ABIL): a South African corporate governance failure

2018 ◽  
Vol 8 (2) ◽  
pp. 1-24
Author(s):  
Stephanie Giamporcaro ◽  
Matthew Marrian
Keyword(s):  
Corporate Governance ◽  
South African ◽  
Emerging Market ◽  
Real Life ◽  
Subject Area ◽  
Complex Situation ◽  
Content Type ◽  
Responsible Investment ◽  
Teaching Case ◽  
Sustainable And Responsible Investment

Subject area The case on ABIL deals with the important issue of corporate governance, and particularly the crucial role that the board of directors plays. It highlights the complex issue institutional investors face when trying to assess the strength of a board and the quality of information and disclosure. The case is set in South Africa which is an emerging market. Study level/applicability The case targets MBA students and can be taught as part of a corporate governance or sustainable and responsible investment module or course. The case is aimed at both local and international students as the case deals with corporate governance principles that are applicable to both audiences. Where necessary, the case provides information to guide international audiences. Case overview The teaching case is set on 6 August 2014 when Ian Matthews, the Head of Equities at a South African Asset Manager, BG Wealth, gets a call while on leave. The call is from his boss, chief investment officer, Deryck Medley, informing him of the negative trading update and asking him to come back to prepare for an emergency investment committee that afternoon. The case traces Matthews’ day as he reviews the research reports BG Wealth had put together on ABIL over the previous 15 months. Matthews also recalls the process the investment team went through internally before finally deciding to invest in the company. The case highlights not only the corporate governance failures of ABIL but also the lack of consideration given to ESG factors by BG Wealth. Expected learning outcomes The case’s primary teaching objective is to highlight the importance of corporate governance. The case provides detailed insights into the area of corporate governance through the analysis of a corporate failure. Through this teaching case, the students will follow the real-life events that led to the collapse of ABIL. It is intended that the students will be forced to deal with a complex situation and will be required to develop specific solutions to the issues raised. Supplementary materials Teaching notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes. Subject code CSS 1: Accounting and Finance.

scholarly journals Activist investors and implications for corporate governance: A case study of Barington Capital Group and L Brands

2019 ◽  
Vol 15 (2) ◽  
pp. 28-36 ◽  
Author(s):  
Hugh Grove ◽  
Mac Clouse
Keyword(s):  
Corporate Governance ◽  
Initial Public Offering ◽  
Boards Of Directors ◽  
Financial Analysis ◽  
Research Question ◽  
Public Information ◽  
Corporate Executives ◽  
Governance Analysis ◽  
Public Offering

The key research question of this paper is to explore the implications for both financial and corporate governance performances from the emergence of activist investors. This paper uses a dramatic case study of one specific activist investor’s role, Barington Capital Group, in analyzing the performance of a public company, L Brands, which lost $20 billion in market capitalization in the last three years while the U.S. stock market was going up significantly. In conclusion, this activist investor’s approach and recommendations in this case study could be used as operational guidelines by boards of directors and corporate executives for improving both their financial and corporate governance performances. From its financial analysis, Barington recommended either an initial public offering of the superior performing Bath & Body Works brand or a spinoff of the weak performing Victoria’s Secret brand. From its corporate governance analysis, Barington recommended that L Brands improve the composition of its board of directors whose deficiencies in director independence, industry experience, and diversity have hindered its ability to effectively oversee and advise management. Accordingly, the major sections of this paper are financial analysis, operational zeitgeist brand analysis, and corporate governance analysis. It is important to note that this paper was prepared exclusively with public information.

scholarly journals Opening the black box: Unpacking board involvement in innovation

2019 ◽  
Vol 18 (4) ◽  
pp. 487-519 ◽  
Author(s):  
Patricia Klarner ◽  
Gilbert Probst ◽  
Michael Useem
Keyword(s):  
Corporate Governance ◽  
Boards Of Directors ◽  
Company Strategy ◽  
Behavioral Diversity ◽  
Pharmaceutical Firms ◽  
Scientific Innovation ◽  
Multiple Case ◽  
Temporal Dimensions

Corporate governance research suggests that boards of directors play key roles in governing company strategy. Although qualitative research has examined board–management relationships to describe board involvement in strategy, we lack detailed insights into how directors engage with organizational members for governing a complex and long-term issue such as product innovation. Our multiple-case study of four listed pharmaceutical firms reveals a sequential process of board involvement: Directors with deep expertise govern scientific innovation, followed by the full board’s involvement in its strategic aspects. The nature of director involvement varies across board levels in terms of the direction (proactive or reactive), timing (regular or spontaneous), and the extent of formality of exchanges between directors and organizational members. Our study contributes to corporate governance research by introducing the concept of board behavioral diversity and by theorizing about the multilevel, structural, and temporal dimensions of board behavior and its relational characteristics.

scholarly journals Corporate Governance Principles and Sustainability

2017 ◽  
Vol 1 (2) ◽  
pp. 13-19 ◽  
Author(s):  
Hugh Grove ◽  
Maclyn Clouse
Keyword(s):  
Corporate Governance ◽  
21St Century ◽  
Boards Of Directors ◽  
Financial Analysts ◽  
Accounting Standards ◽  
Lessons Learned ◽  
International Accounting Standards ◽  
Short Sellers ◽  
The U.S

With 21st century U.S. frauds destroying well over one trillion of market capitalization and now with Valeant’s 2016 market cap destruction of $86 billion, the question must again be asked: where were the gatekeepers (boards of directors, regulators, sell-side financial analysts, and auditors) to protect investors? Many of these frauds were caught only by short sellers, such as Jim Chanos (shorting Enron in 2000 and Valeant in 2014), Andrew Left (shorting Valeant in 2015), and buy-side financial analysts. Sir David Tweedy, the former chair of the International Accounting Standards Board, has commented: “The scandals that we have seen in recent years are often attributed to accounting although, in fact, I think the U.S. cases are corporate governance scandals involving fraud” (Tweedy, 2007). This paper is a case study using the Valeant $86 billion market cap destruction in 2016 to emphasize the timeless nature of such corporate governance scandals. This scandal was even larger than the infamous $78 billion market cap destruction scandal of Enron which occurred 15 years earlier in 2001. These scandals appear here to stay as the new normal so these gatekeepers should be doing everything they can to analyze the ongoing fraud problems. Accordingly, as a case study, this paper develops lessons learned from this $86 billion Valeant scandal to emphasize the importance of sustainable corporate governance principles as a pathway to avoid malpractices in the future.

scholarly journals An activist investor’s successful corporate governance and strategic management impacts: An updated L Brands case study

2021 ◽  
Vol 17 (3) ◽  
pp. 61-71
Author(s):  
Hugh Grove ◽  
Maclyn Clouse
Keyword(s):  
Corporate Governance ◽  
Strategic Management ◽  
Initial Public Offering ◽  
Financial Analysis ◽  
Public Information ◽  
The Public ◽  
Public Company ◽  
Public Offering ◽  
Industry Experience

The key research aim of this paper is to analyze whether an activist investor’s recommendations for financial, corporate governance, and strategic management performances were successful or not. This paper updates the initial case study of the activist investor, Barington Capital Group, in analyzing the performance of a public company, L Brands, which had lost $20 billion in market capitalization in the last three years prior to the public letter from Barington to the L Brands CEO in March 2019. This updated case study analyzes whether Barington’s initial recommendations worked as operational guidelines for improving L Brands’ financial, corporate governance, and strategic management performances. From its financial analysis, Barington recommended either an initial public offering of the superior performing Bath & Body Works brand or a spinoff of the weak performing Victoria’s Secret brand. From its corporate governance and strategic management analysis, Barington recommended that L Brands improve the composition of its board of directors whose deficiencies in director independence, industry experience, and diversity hindered its ability to effectively oversee and advise strategic management. It is important to note that this paper was prepared exclusively with public information.

scholarly journals Sustainability governance and legitimisation processes: Gulf of Mexico oil spill

2020 ◽  
Vol 11 (1) ◽  
pp. 253-278 ◽  
Author(s):  
Nader Elsayed ◽  
Sameh Ammar
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Gulf Of Mexico ◽  
Oil Spill ◽  
Content Type ◽  
Responsible Investment ◽  
Sustainability Governance ◽  
Corporate Social ◽  
Practical Implications

Purpose The purpose of this paper is to explore the emergence of sustainability governance through the unfolding hybridisation process between corporate governance and corporate social responsibility and the implications of this for understanding patterns in sustainability reporting over time. Design/methodology/approach The Gulf of Mexico oil spill incident is an extreme case study undertaken to examine its implications on the organisational legitimacy of British Petroleum (BP) and the latter’s response to the incident and beyond. The paper draws on Suchman’s legitimacy framework (1995) to understand sustainability governance as an organisational practice that evolved post the Gulf of Mexico oil spill to manage BP’s legitimacy. It draws on archival records and documentation from 2008 to 2017, as key sources for data collection, using interrogation by NVivo software. Findings Sustainability governance is a sound practice that was socially constructed to manage the re-legitimatisation process following the Gulf of Mexico oil spill. It is characterised by broadness (the interplay between the corporate governance and corporate social responsibility disciplines), dynamic (developing the tactics to repair and maintain legitimacy), agility (conforming to the accountability for socially responsible investment and ensuring steps towards geopolitically responsible investment) and interdependence (reflecting composition and interactions). Practical implications This paper has practical implications for organisations, in terms of sustainability governance’s constitution, mechanism and characteristics. Social implications This paper has implications not only for organisations, in terms of sustainability governance’s characteristics, but also for policy-makers, regulators and accounting education. However, the present paper’s insights are achieved through an in-depth and longitudinal case study. Originality/value This paper has problematized the concept of sustainability governance and elaborated its evolution (the emergence, enactment, deployment and interplay) process. The sustainability governance showed an otherwise organisational response that moves our understanding of the deployment of disclosure for complex organisational change as a way to discredit events.

scholarly journals Financial analysis and corporate governance of AA: A case study

2019 ◽  
Vol 16 (2) ◽  
pp. 19-24 ◽  
Author(s):  
Philip Law ◽  
Desmond Yuen
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Financial Analysis ◽  
Operating Performance ◽  
Cash Flows ◽  
Ratio Analysis ◽  
Financial Leverage ◽  
Financial Reports ◽  
Good Corporate Governance

This paper evaluates AA’s financial performances by analyzing its financial reports throughout 2010 to 2012 using ratio analysis. Strengths and weaknesses are identified. Quantitative ratio analysis (liquidity measurement, profitability indicators, financial leverage/gearing, operating performance and investment valuation) indicates AA scores satisfactory among the five indicators, implying good corporate governance positively enhances financial performance. Positive cash flows reveal satisfactory liquidity positions. Results provide implications for companies to maintain better corporate governance in future.

scholarly journals Due Diligence Procedures and Principles for Financial Analysis and Corporate Governance

2018 ◽  
Vol 12 (1) ◽  
pp. 107-114
Author(s):  
Hugh Grove ◽  
Mac Clouse
Keyword(s):  
Corporate Governance ◽  
Boards Of Directors ◽  
Financial Analysis ◽  
Financial Analysts ◽  
Forensic Analysis ◽  
Common Stock ◽  
Corporate Executives ◽  
Governance Practices ◽  
Global Companies ◽  
A Company

An initial set of seven procedures is developed for assessing a company’s common stock. A second set of ten procedures is developed for performing stealth or external financial (forensic) analysis on a company’s common stock. Also, a set of eight corporate governance principles, developed in secret over one year by 13 prominent CEOs of U.S. based, global companies, are elaborated for analyzing a company’s corporate governance practices in this paper. The purpose of this paper is to portray how these procedures and principles can be used by financial analysts and Boards of Directors in helping to assess the viability of the companies they are analyzing or serving and to develop key questions to ask of corporate executives. Thus, the first set of procedures elaborates seven reasons to consider in assessing a company’s stock. The second set of procedures develops ten steps of stealth forensics to investigate the possibility of financial shenanigans or fraud by a company. The last set of eight principles assesses the strength of corporate governance in a company. The importance of these principles is demonstrated by matching them with the practices of just 18 mainly global companies that managed to destroy $1.5 trillion of market capitalization. All these twenty-five procedures and principles will help strengthen financial analysis and corporate governance, especially for the role of financial analysts and Boards of Directors in assessing the value of companies’ common stock for investors.

Growing pains – a case study from higher education

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Oyvin Kyvik
Keyword(s):  
Organizational Development ◽  
Theoretical Basis ◽  
Strategic Change ◽  
Relevant Literature ◽  
Real Life ◽  
Basic Knowledge ◽  
Content Type ◽  
Teaching Case ◽  
Growing Pains

Theoretical basis The teaching case study is based on a (real-life) complex organizational and strategic context, and several bodies of literature may be used to interpret, analyze, explore and discuss alternative solutions. Among several relevant theoretical basis are (educational) leadership, strategy, institutional change, organization, practice orientation of education and organizational learning. The Instructors’ Manual gives suggestions as to how the case may be used in teaching and gives references to relevant literature. Research methodology The teaching case study is based on participatory action research. The narrative of the case is based on empirical observations in form of a research diary recording events, dialogues and discussion with colleagues and organizational leaders during a five-year period. The case study is based on real proceedings. But, the narrative is generic, and names are anonymized, and organizational contexts and events are disguised. Any similarities to real institutions are coincidental. Case overview/synopsis The case tells the story of Birk Grimson (PhD), a professional who returns to academia after many years of business practice in the private sector. He is struck by how different the work ambience is in academia and how bureaucracy and a rigid organizational structure seem to quell innovation, resulting in resistance to systematic learning, organizational development and strategic change. Complexity academic level The teaching case study is appropriate for business, organizational or administrative students at master’s, PhD level or executive education. For students with other disciplinary educational backgrounds (such as engineering, education or health care), some basic knowledge of organization and management or alternatively relevant experience is recommended. Supplementary materials Teaching notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes.

Contamination Lab of Turin (CLabTo)

2019 ◽  
Vol 2 (1) ◽  
Author(s):  
Eleonora FIORE ◽  
Giuliano SANSONE ◽  
Chiara Lorenza REMONDINO ◽  
Paolo Marco TAMBORRINI
Keyword(s):  
University Students ◽  
Single Case ◽  
Real Life ◽  
Learning By Doing ◽  
Assessment Data ◽  
Entrepreneurial Skills ◽  
Fields Of Study ◽  
Education Levels ◽  
Positive Effect

Interest in offering Entrepreneurship Education (EE) to all kinds of university students is increasing. Therefore, universities are increasing the number of entrepreneurship courses intended for students from different fields of study and with different education levels. Through a single case study of the Contamination Lab of Turin (CLabTo), we suggest how EE may be taught to all kinds of university students. We have combined design methods with EE to create a practical-oriented entrepreneurship course which allows students to work in transdisciplinary teams through a learning-by-doing approach on real-life projects. Professors from different departments have been included to create a multidisciplinary environment. We have drawn on programme assessment data, including pre- and post-surveys. Overall, we have found a positive effect of the programme on the students’ entrepreneurial skills. However, when the data was broken down according to the students’ fields of study and education levels, mixed results emerged.

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