SamsungCase Questions
Prof. Florencio Lopez-de-Silanes
Case: Samsung Electronics
1. What are the benefits and disadvantages of the Korean chaebol structure? In particular what governance issues can arise due to this structure?
2. Analyze the capital structure of Samsung Electronics. Compare it with the capital structure of a company in the similar line of business (primarily manufacture of chips) from another developed country and comment on the differences.
3. If Samsung Motors makes an after tax profit of USD100 million, what share of that would go to the Lee family (owners)? What percentage of Samsung Motors do they directly own? (Note: You do not have to provide the exact number. A good approximation will be adequate.)
4. The client wants to recommend governance changes with special emphasis on the board of directors. Evaluate the current board of Samsung Electronics. What are the strengths and weaknesses in the current board composition? How many directors can be classified as non-executive? How many can be classified as independent? What are your criteria’s for assessing director independence? Do you think changes need to be made to the current board composition? If no - why not, if yes - what changes would you recommend?
5. Based on the company’s financials as of December 31, 1997 and publicly available information, investigate the allegations made by Dr. Jang. Do you think the convertible bond issue was a self-dealing transaction? How would you prove that claim? What evidence do you have on you claim? (Note: you are not expected to do a
DCF.)
6. Does the agreement with the Pan-Pacific Industrial Investment resemble a simple direct investment or something else? Why was the guarantee clause included in the contract? Does it change the instrument? If you were on the Audit committee of the company what questions would you ask about this transaction?
1
Prof. Florencio Lopez-de-Silanes
Case: Samsung Electronics
7. The client wants to know the main corporate governance
Case: Samsung Electronics
1. What are the benefits and disadvantages of the Korean chaebol structure? In particular what governance issues can arise due to this structure?
2. Analyze the capital structure of Samsung Electronics. Compare it with the capital structure of a company in the similar line of business (primarily manufacture of chips) from another developed country and comment on the differences.
3. If Samsung Motors makes an after tax profit of USD100 million, what share of that would go to the Lee family (owners)? What percentage of Samsung Motors do they directly own? (Note: You do not have to provide the exact number. A good approximation will be adequate.)
4. The client wants to recommend governance changes with special emphasis on the board of directors. Evaluate the current board of Samsung Electronics. What are the strengths and weaknesses in the current board composition? How many directors can be classified as non-executive? How many can be classified as independent? What are your criteria’s for assessing director independence? Do you think changes need to be made to the current board composition? If no - why not, if yes - what changes would you recommend?
5. Based on the company’s financials as of December 31, 1997 and publicly available information, investigate the allegations made by Dr. Jang. Do you think the convertible bond issue was a self-dealing transaction? How would you prove that claim? What evidence do you have on you claim? (Note: you are not expected to do a
DCF.)
6. Does the agreement with the Pan-Pacific Industrial Investment resemble a simple direct investment or something else? Why was the guarantee clause included in the contract? Does it change the instrument? If you were on the Audit committee of the company what questions would you ask about this transaction?
1
Prof. Florencio Lopez-de-Silanes
Case: Samsung Electronics
7. The client wants to know the main corporate governance