Reference no: EM132306701

Assignment

Ask this question: Hedge funds can focus on a number of issues at companies they own - operating changes, capital structure changes, or governance changes. Of these three main areas, where do you think funds should focus their attention? Why? In general, do you think that hedge fund activism increases market efficiency? Why or why not?

Do peer review of this question: Imagine that you are the lead director on the board of a public company. A significant number of shareholders have withheld their votes (i.e., "just voted no") for another director. What would you do? Would you pressure him to resign? What would you do if votes were withheld for all directors, including yourself?

Peer's answer: In my opinion, I would not suggest the director to resign. Because each director in the board is a significant part of the management of the company, which means this director understand the idea of the board to help the company grow.

If the shareholders only withheld their votes for this director, I would suggest the board to investigate the director to find out whether this director have done something illegal or whether the director violate the rule. If the director had done nothing bad to damage the company's operation, I would not pressure the director to resign.

If voles were withheld for all directors, I would resign. In my opinion, it is obvious that the board can not help the company and provide the benefit that shareholders want, when a significant number of shareholders withheld their votes for all directors. This situation shows that the shareholders of the company didn't trust the board and this is a very clear sign that the directors of the board need to be replaced.