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Corp Finance/Derivatives > I-Corporate Governance-4 > Flashcards

I-Corporate Governance-4 Flashcards

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1
Q

Define: Corporate Governance

Principles of Coporate Governance 特点

A

a system of internal controls and procedures

by which individual companies are managed

  • do not mandate, or even promote adoption of single corporate goverance regime, only serve as a framework that can be adopted
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2
Q

Stakeholder groups

各自关注点

  • creditors
  • managers & employees
  • customers
  • suppliers
  • gov/regulators
A
  • creditors: CFO to cover repayment
  • managers: company’s viability
  • customers: company’s stability, less concerned by financial performance
  • suppliers: CF for 应付账款
  • gov: interests of the general public
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3
Q

conflict of interest between

  • shareholder/management, DoB 5
  • controlling/minority shareholder 2
  • shareholder/creditor
  • customer/supplier
  • shareholder/gov
A
  • 1.management seek maximizing personal benefits. 2.risk tolerance: 股东更高，管理层保位置i。3, information asymmetry. 4. board influnenced by insiders. 5. director favor certain shareholder than other
    1. straight voting/ culmulative voting. 2. multiple class structure
  • risk tolerance
  • 对顾客赊销太多linient credit sale, 欠供应商账款
    1. avoid tax burden. 2. banks prefer lower equity capital base, regulators require higher
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4
Q

stakeholder management

几种infrastructure

A
  • legal
  • contractual (公司自己可控)
  • organizational (internal systems)
  • governmental
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5
Q
  1. AGM (annual general meeting)讨论事项 5
  2. EGM (extraordinary general meeting)讨论事项 3
A
    1. performance 2. 选董事会 3. approve financial statements 4. 选external auditors 5. 确定董事高管薪酬
    1. amendment to company bylaws 2. M&A 3. sale significant asset or business
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6
Q

【say on pay】

  1. 内涵
  2. 分类
  3. criticism
A
  1. shareholders vote on 高管薪酬
  2. non-mandatory: Canada
  3. mandatory, non-binding: US, France
  4. binding: UK, China
  5. board is better suited to determin remuneration matters
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7
Q

名词解释

  1. ESOP
  2. staggered board
  3. stranded assets
A
  1. Employee stock ownership plans
  2. board members 分三轮换届
  3. carbon-intensive assets that are at risk of no longer being economically viable because of changes in regulation
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8
Q

Board of Directors

具体职责6

A
  1. 任命高管
  2. review财报，确保准确
  3. review审计报告from internal, external, committee,并跟踪改进
  4. ultimage responsibility: implement governance principles, laws, regulations
  5. ensure risk management system in place
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9
Q

BoD

  1. 两种duty
  2. 两种tier
A
  1. duty of care: due diligence and care
  2. duty of loyalty: act in the interest of company and shareholders
  3. one tier: 同时包含高管和non-executive （英美）
  4. two-tier: supervisory board (non-executive,最高)和executive board (欧洲，中国)
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10
Q

committee的职责

  1. audit committee
  2. governance committee
  3. remuneration/compensation 4
  4. nomination
  5. 额外要求
A
  1. 推荐external auditor及薪酬
  2. 监督implementation of governance principle, annual evaluation of the board
  3. a. propose remuneration policy, b. handle manager contract, c. performance criteria, evaluation, d. company HR policy
  4. 选择潜在director，维持board composiiton
  5. 审计、薪酬委员会必须由independent director担任
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11
Q

影响stakeholder relations因素

market factors 3

A
  • shareholder engagement 有好处
  • shareholder activism 对冲基金
  • competition and takeovers: proxy contest, tender offer, hostile takeover
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12
Q

影响stakeholder relations因素

non-market factors 3

A
  • legal environment: common law system: 绝对保护股东权益，civil law system要弱一些。此外，creditors easier to seek remedies in court
  • media: 推动公司治理改革，让股东有更多渠道和管理层竞争发声
  • corporate governance industry
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13
Q

辨析：

straight voting

culmulative voting

A

straight voting: 【statutory voting】70% and 30% 各出5，3个董事会候选人。5人都得70票，3人都得30

culmulative voting: 70%总共350票，30%总共150票

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14
Q

名词解释

  1. sell-out rights
  2. clawback provision
A
  1. Sell-out rights protect minority shareholders in acquisition situations by forcing acquirers to buy out minority shareholders at a fair price, even if those shareholders initially voted against the acquirer’s offer.
  2. clawback provisions allow companies to recover executive remuneration under certain circumstances, to the benefit of all shareholders
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15
Q

5种ESG implementation approaches

A
  1. negative screening (exclusionary)
  2. positive screening (best-in-class)
  3. ESG integration into traditional analysis
  4. thematic investing
  5. impact investing
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16
Q

Capital Budgeting

process 4步

A
  1. generating ideas
  2. analysing individual proposals
  3. planning the capital budget
  4. monitoring and post-auditing
17
Q

post-auditing

之意义3

A
  1. monitor performance,找出与forcast不同之原因
  2. improve business operation, 修正到forecast轨道上
  3. give ideas to future investments: 哪里更profitable
18
Q

5categories of

capital projects

A
  1. replacement projects: 替换/维持现有的，或换性能更好的以降低成本
  2. expansion project:扩大现有产能
  3. new products/ services: 新业务
  4. (mandatory) regulation, safety, environmental
  5. other: CEO pet project,以及无法用一般方法来分析的。
19
Q

6 Priciples of

capital budgeting

A
  1. based on CF not accounting concepts; CF is not equal to net income
  2. timing of CF is crucial
  3. consider CF after tax
  4. consider opportunity costs (incremental CF)
  5. should be excluded in capital budgeting: sunk cost, financing costs
  6. should be included: externatilty: negative (Cannibalizaiton)/positive
20
Q

3 types of project interactions

A
  1. independent/mutually exlusive projects
  2. project sequencing
  3. unlimited funds/ capital rationing
21
Q

6 project evaluation criteria

A
  1. NPV
  2. IRR
  3. Pay back period PBP
  4. discounted payback period DBP
  5. average accoungting rate of return AAR
  6. profitability index PI
22
Q

NPV rule

advantage 2

disadvantage 1

A
  1. 直接add value to the firm (rather than to creditors)
  2. realistic discount rate
  3. project size ignored
23
Q

IRR rule

advantage 2

problem 2

小结论1

A
  1. 直接reflect profitability
  2. comparable between different size
  3. assume reinvestment at IRR rate - unrealistic
  4. No IRR or multiple IRR
  5. multiple IRR:产生于non-conventional CF (符号变化多余1)，符号变化几次，就最多可能有几解
24
Q

【Payback Period】

  1. 算法
  2. 优势2
  3. 不足3
  4. 小结论1.

【discounted payback period】

  1. 优势2
  2. 不足2
  3. 小结论1
A
  1. 第三年还差200没收回，第三年CF+300，则2.67年
  2. simple/ indicate risk/liquidity
  3. 未考虑货币时间价值/payback period 之后的CF未考虑/ 无法indicate profitability
  4. 有时PBP能算出,但其实NPV为负
  5. 考虑了货币时间价值/risk,liquidity
  6. 依然未考虑payback period 之后的CF/ 无法indicate profitability
  7. 收回时间相较PBP更长
25
Q

average accounting rate of return

【AAR】

  1. 算法
  2. 优势1
  3. 不足3
A
  1. 按预测，按利润表列出每年NI。资产逐渐折旧完

ARR= avg NI/ avg book value

  1. 易懂易算
  2. based on accounting numbers not CF

为考虑时间价值

无明确判断标准

26
Q

Profitability index 【PI】

  1. 算法
  2. 优势
  3. 缺点
A
  1. PI= PV of all future CF/ initial CF outlay

=1+NPV/CF0-

  1. 可进行profitability 比较
  2. 不知道absolute amount
27
Q

NPV profile

  1. 纵截距/横截距代表？
  2. 斜率大说明？
  3. 计算crossover rate
A
  1. 纵：所有CF之和，横：IRR
  2. 说明大额现金流出现时间较晚
  3. 每一期CFA-CFB,形成一个类似新的project，计算IRR
28
Q

投资项目

impact on stock price 【in theory】

算法

A

NPV/outstanding common share

= Δstock price

29
Q

一个项目initial CF outlay

和future CF all double

NPV和IRR如何变化？

A

NPV：double

IRR：不变（成比增长）

Corp Finance/Derivatives (6 decks)

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