affect the exercise of independent judgement 5. What are the implications on corporate governance under the following theories. i) transaction cost economics, ii) resource dependence theory? (5 marks) Section B (40 marks: Case Study 1: Occidental Petroleum) Answer ALL questions relating to this case. The following news report appeared in the business posts on March 13, 2020: March 13, 2020: Occidental Tries to Head Off Investor Icahn (Reuters) - Occidental Petroleum (OXY) said on Friday it will move to stop investors from amassing more than a 15% stake in a move aimed at activist investor Carl Icahn, who has been buying up shares and stepping up criticism of the oil producer's $38 billion purchase of Anadarko Petroleum last year. Occidental said on Friday it will issue a shareholder rights offering to dilute the potential ownership interest of a hostile party. Icahn now owns nearly 10% of the company's stock, he said this week, and has been agitating for changes to OXY's board following the Anadarko deal. "It's time for OXY, CEO and board to be held accountable (for its bad management decision)" Icahn said in an interview with CNBC on Friday. Icahn bought about 88.6 million shares for $2.21 billion, raising his stake in Occidental to nearly 10% from 2.53% at the end of last year, an SEC filing on Thursday showed. The rights offering would issue one right for each share outstanding at the close of March 23, exercisable if a person or group acquires at least 15% of the company's shares, or if passive institutional investors buy 20% of the oil producer. The rights plan has to be approved at the 2020 annual meeting, the company said." However, the following news report appeared in the business posts on March 25, 2020. March 25, 2020: Agreement Reached (Reuters) - On March 25, 2020, Occidental Petroleum Corp announced that it has reached agreement with Icahn to add three new directors designated by Icahn to its board of directors. As part of the agreement, it Page 2 of 4 has withdrawn its shareholder rights offering proposal. The board will also adopt certain corporate governance-enhancing amendments to its by-laws, and will create an oversight committee that includes two of the Icahn-designated directors and cut capital expenditure plans and costs further. Background information Occidental Petroleum Corporation is engaged in hydrocarbon (including oil and gas) exploration in the United States, the Middle East, and Colombia as well as petrochemical manufacturing in the United States, Canada, and Chile. It is headquartered in Houston, Texas, USA. The company was ranked 167th on the Fortune 500 in 2019. Required: 1. What are the rights of the shareholders in a listed company? (10 marks) 2. How are activist shareholders investors) different from ordinary shareholders? (5 marks) (7 marks) 3. Based on this case, illustrate the business model of an activist investor? 4. Based on this case, how can a poison pill affect governance improvements? (5 marks) 5. Under a modern governance system, what is the division of powers between shareholders and directors? Based on these differences, what are the major concerns against shareholder activism? (5 marks) 6. On the whole, is shareholder activism advantageous or disadvantageous for ordinary shareholders? (3 marks) (5 marks) 7. Why is shareholder activism not common in Hong Kong