Question

Read The Wall Street Journal or other business publications such as Business Week, Forbes, Fortune, The Economist, and Barron’s (not Newsday, People, The World Wrestling Federation News,etc.). Find an article of interest that broadly or specifically deals with corporate finance. In one typewritten page, tell me what you think about the article and how it may relate to corporate finance. Pick an article of your choosing from Forbes , Fortune, etc. Make it a page length.

Answer 1

Article Title - Tata’s Governance is Still Faulty

Source - The Economist

Link of the article - https://www.economist.com/business/2017/02/09/tatas-governance-is-still-faulty

Date - 9th Feb 2017

Summary of Article-

It was always considered that profit is a result of good corporate governance for which company Tata is always famous for. But currently profit is achieved but later corporate governnace is missing from the fompany when Cyrus Mistry was removed from the company and Nataranjan Chandrashekharan was appointed as new chairman of the company.

Market, investors and companys executives reacted negatively with Mr mistry being evicted from the company who has almost 18% stake in Tata sons which is unlisted company on the stock exchange. Mr mistry refused to step down from the group company since long but finally got rid of it.

After eviction, Mr mistry claimed on various aspect of financial and corporate governance on the parent company and subsidary company.However company has denied any internal personal relations between Tata trust, tata sons and other subsidaries. Now it si time to see how the new chairman of the company react to such allegations and how it proves the affadavit and other documentation wrong.

Ta ta for now Structure of Tata Group, various operating companies and holding stakes* TATA TRUSTS (Chairman: Ratan Tata) OTHERS (Incl. Mistry family) 66% 34% TATA SONS (Chairman: Ratan Tatat) 22% 100% Other wholly owned subsidiaries 23% Tata Global Beverages Tata Motors 30% 74% Tata Consultancy Services 19% Tata Chemicals Tata Steel Nine other major listed entities 20-68% Other operating entities in turn have a stake in Tata Sons *At end-March 2016 Interim position until February 21st, then N. Chandrasekaran Source: Company reports Economist.com

Mr mistry had litigations against Board of directors regarding the manipulation and changes in the Article of association. This is a serious allegation. It is said that Mr mistry is also the part of the internal changes.Still there is lack of clarity between the relations of Tata sons and Tata trust.

The main corporate governnace problem is the minority of interest of the shareholders of both the company. at any level of businesses, this has affected the decision process of the company. legally also it is unclear what form of charities of dividend Tata trust has receieved from Tata sons