MN341Current Issues in FinancePart 1 (35% of total marks) (750 words. )Using a company of your choice answer the following question: Explain to someone who has no knowledge of corporate social reporting ‘what is a silent and shadow account? Part 2 (65% of total marks) (parts A, B and C- 1750 words). A. Risk disclosure (Word count guide: 550 words)*1.Identify three sentences* that represent voluntary disclosures of risk information sentences. (3 marks)2.Categorise the three sentences according to the Linsley and Shrives disclosure grid attached to this assignment and explain why you have chosen to categorise the sentences in this manner.
(6 marks)3.For each sentence critically discuss whether agency theory, signalling theory or legitimacy theory could explain why the directors have chosen to voluntarily disclose this piece of risk information. (12 marks)*Note that you should not identify generalised statements of risk management policy. 1. Three sentencesTelecom Plus PlcSentence IThe Company received notification today that on 21 March 2007 Michael Pavia, non-executive director, acquired 10,000 ordinary shares of 5p each at a price of 195 pence per share. Mr Pavia has a beneficial interest in 10,000 shares, representing approximately 0.01 per cent of the issued share capital of the Company. Source: Notification of Major Interest in Shares - 28 March 2007 Sentence II“The difficulties of last winter are now firmly behind us, and the business is now in excellentshape.
We are confident of delivering results for the full year which exceed our previous bestpre-tax profits of £10.5m to 31 March 2005, and we look forward to the future with renewedconfidence. ”Source: Interim results for the six months ended 30 September 2006Sentence III“Financial and business highlights”· Turnover up 32% to £68.5m (2005: £51.9m)· Profit before tax up 9% to £5.5m (2005: £5.1m)· Net cash balance up £18.7m during the period· Interim dividend of 2p per share (2005: Nil)· Services provided up 5% to 521,000 during the period· Launch of attractive new broadband packages· Positive contribution from energy, with npower agreement protecting Telecom plus fromfluctuations in wholesale energy marketsSource: Interim results for the six months ended 30 September 20062.
Categorization of the three sentences according to the Linsley and Shrives disclosure gridFinancial RiskOperations RiskEmpowerment RiskInformation Processing and Technology RiskIntegrity RiskStrategic RiskText DisclosuresSentence Characteristics123456Monetary/good news/futureAYesMonetary/bad news/futureBYesMonetary/neutral/futureCYesNon-monetary/good news/futureDYesYesNon-monetary/ bad news/futureEYesYesNon-monetary/neutral/futureFYesYesMonetary/good news/pastGMonetary/bad news/pastHYesYesMonetary/neutral/pastINon-monetary/good news/pastJYesNon-monetary/ bad news/pastKYesNon-monetary/neutral/pastLYesYes3.
Discussion on each sentenceSentence I. This sentence is believed to disclose according to the agency theory (Fama, 1980). The agency theory mentions that there are conflicting objectives exist when the objectives of management agent deviate from the common of objectives of the company. Thus, the company discloses the information on holding of shares of their executives. Sentence II. This sentence is believed to intend to declare the operational risk the company faced last year. In addition, it also declared that the company has confidence on future operations. Sentence III.
The sentence provides the financial information on the company operations. B. International corporate governance (Word count guide: 650 words)1. Select any one of the following countries: - Indonesia, India, China, USA, UK, Hong Kong, Malaysia, Germany, France, or Japan. 2. Identify and outline three major governance characteristics of the selected country. (6 marks)3. Provide a brief description of two major governance challenges faced by the country of your choice. (4 marks)4. Propose possible reform initiatives that could be taken to remedy the identified challenges.
Critically discuss the strengths, drawbacks and/or potential problems arising from implementing such measures. (14 marks)