There are THREE sections of this exam. Be sure to complete all three sections: section A,
section B and section C. Please upload your work on eClass under relevant link.
Section A: Short essay Question (maximum 3 pages)
Total: 35 marks
Answer either question # 1 or question #2. Your answer will be graded out of 30 marks. You
must write in standard essay format (thesis statement, intro, body, conclusion) and draw on
lectures AND course materials in your response (from Trickkers chapters, additional readings,
documentaries, debate, and lectures). Maximum 3 pages, double space.
1. Overly focusing on shareholders interests may produce serious problems and
negative outcomes for environment and local community. Do you agree with this
statement? Use the lectures and course materials to illustrate your point.
2. Thorstein Veblen once said: Investment is a pecuniary transaction, and its aim is
pecuniary gain. Do you agree with this statement? Use the lectures and course
materials to illustrate your point.
Section B: Maximum 3 pages
Total: 35 marks
You must write in standard essay format (thesis statement, intro, body, conclusion) and draw on
lectures and course materials in your response. Maximum 3 pages, double space.
Analyze and discuss the attached article on governance Investor remind business leaders:
Governance matter, using at least two of the theses explained in class (for example,
shareholder model, shareholder rights, stakeholder model, firm regulation, director primacy
model, the governance partnership, etc.). Be sure to explain the thesis, justify why you chose the
thesis you did, explain how it relates to the article. You are encouraged to reference
similar/different readings we have read and reference certain theories that might inform your
approach to analyzing the article.
Investors remind business leaders: Governance matters by Michael Birshan, Madeleine Georg,
Anna Moore, and Ellora-Julie Parekh (McKinsey &Company).
The article is posted on the lecture eClass under December right below the questions.
Section C: Case study
Total: 30 marks
Case study: The Wallenberg GroupCorporate governance in Sweden has a number of distinctive characteristicsmandatory co
determination, high private share ownership, dual-class shares, shareholders board nominating
committee, and spheres of private owners. The Wallenberg family forms such a sphere, owning
a business empire that is more of a dynasty than a company. Now in its fifth generation of family
control, and planning for the sixth, this huge empire dominates Swedish business.
The Wallenbergs own some 40% of the value of the Swedish stock exchange, but through dual
class shares, which give greater voting rights to their shares than to others, exercise control over
many companies. Their interests include around 19% by value, 38% by votes, of car-maker
Saab; 5% by value, 20% by votes, of Ericsson, a leading telecommunications company; around
11% by value, 28% by votes, of Electrolux, a white goods manufacturer; and also major interests
in Atlas Copco, ABB, a global engineering group; SEB, one of Scandinavias largest banks; and
many other companies. They also control 4% by value and votes of AstraZeneca, a
pharmaceutical company listed in London, where dual-class shares are not permitted.
Wallenberg ownership is exercised through the Wallenberg foundations (assets US$6 billion),
which exercise just under 50% of the votes in Investor, a public company chaired by Jacob
Wallenberg, with over 100,000 other investors sharing in the family fortunes. Companies
dominated by Investor are run by professional managers with their own boards of directors.
However, Jacob Wallenberg insists that the family are not just kingmakers, as some claim, but
are closely involved in the companies corporate strategies. The governance style adopted by the
Wallenbergs is based on a network of carefully fostered contacts, a policy to shift investment
strategies from the past to the future as industries and technologies change, but then to stick with
their companies through thick and thin. Marcus Wallenberg, of the fifth and present generation,
has invested in technology firms.
The family claim that they deserve their special rights in the multiple-voting, dual-class shares
because of the familys role in successfully founding and developing Swedish companies over
the years, and their tradition of strong and involved ownership.
Questions:
1. Swedish law and the rules of some stock exchanges permit the issuing of the dual-class
shares used in the Wallenberg Group. Do you think they should? Why and why not? (15 points)
2. Please write a letter to the Wallenberg in response against the family’s justification for their
dual-class shares, given in the last paragraph of the case. (15 points)
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