Given the spate of U.S. corporate scandals in the early 2000s and the corporate governance failures associated with the 2008 financial crisis, this material is ripe testing fodder for CFAI.  Further, an analyst’s ability to detect corporate governance weakness ahead of the crowd, may position him/herself for juicy investment returns.

This week’s sheet aligns with Study Session 9 material in the Level II CFA Program Curriculum©.

A reasonable question expectation is one to three questions on corporate governance and one to three questions on M&A.  Neither topic will likely cover a full item set, but rather join with other corporate finance issues on combination item sets.

Material:

I.          Corporate Governance

II.        Mergers and Acquisitions (M&A)

The material contained within this segment of corporate finance is heavily list driven and process driven.  Candidates may find it helpful to make flash cards of certain lists and processes.  Taken in combination, corporate governance and M&A will likely make up no more than 5% (six questions) of the total exam.  If a candidate struggled with quant or economics, then corporate finance is a great section to emphasize for “points recovery”.  Another important consideration is that corporate finance questions have heavy linkages to financial reporting and equity, which are two of the top tier subjects for the Level II exam.