FIN3414: Investigations relating to vehicular safety sparked off a series of General Motors (GM) product recalls in early 2014: Investment and Financial Analysis, Assignment, FIC, Singapore

Case overview

Investigations relating to vehicular safety sparked off a series of General Motors (GM) product recalls in early 2014. While product recalls are common in the U.S., the fact that the defect had been known to GM for more than a decade prior to the recalls raises serious concerns over the company’s management practices.

There were questions about the prior connections of directors with GM and number of years served by some of the directors. Diversity of the board of directors was also seen to be poor. The objective of this case is to allow a discussion of corporate governance issues relating to board composition; culture and tone at the top; as well as the role of regulators.

The above Case Study: General Motors: Safety on Board is related to CORPORATE GOVERNANCE ISSUE. You are to discuss the following based on the concept of corporate governance.

1. Explain the possible corporate governance issues relating to GM’s Board of Directors and how it could have contributed to GM’s problems.
2. In 1990s and early 2000s, GM had a practice promoting the CEO to Chairman when a new CEO was appointed. Evaluate the pros and cons of such a practice.
3. Referring to the Principle A, Part I, Practice 1.4 of Malaysian Code on Corporate Governance 2021, chairman of the board should not be a member of the audit committee, nomination committee or remuneration committee. Discuss the rationale of this practice.