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[Author Name(s), First M. Last, Omit Titles and Degrees]

[Institutional Affiliation(s)]
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Question #1:

Understanding clustering is important. Suppose I have 20 suits. 8 are Navy. 5 are a

slightly lighter shade of dark blue. 3 have patterns of some kind. 1 is charcoal. 1 is a

tuxedo. Is there clustering in the suits? Explain.

Yes, there is clustering in the suits. According to cluster analysis, it is a statistical method for

categorizing comparable things into groups. It's also known as clustering, taxonomy analysis, or

segmentation analysis. The quality of a clustering result is determined by the method's similarity

measure as well as its implementation. The ability of a clustering approach to discover some or

all of the hidden patterns is also a criterion for its quality. Navy, lighter hues, patterns, charcoal,

and tuxedo are the different categories represented by the outfit. As a result, it has clusters. There

is one thing that all of the categories have in common: they are all suits, but there is nothing in

common on the inside. As a result, it is the greatest approach to show that it is an example of

cluster analysis.

Question #2:

Explain three problems with independent directors.

Directors of incorporated companies with no monetary benefit or material pecuniary

relationship with the company are the independent directors. With evolving rules, the job of

independent directors has changed to that of a sounding board for compliance and a governance

watchdog. It is therefore essential to have insights into the roles and responsibilities of an

independent director.

The first limitation that is prevalent is their lack of informational visibility of the company as

being a non-executive director. Here he is expected to have vast oversight over innumerable

aspects such as the financial reporting, governance, risk management, and growth prospects
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evaluations of the company. In reality, this is not possible and needs proper emphasis on it

[ CITATION Sun16 \l 1033 ].

With the corporate goal of increased wealth maximization, there seems to be an understanding

that the role of independent directors is important for protecting the interests of minority

stakeholders. However, the appointment of the directors does not guarantee that interests be

protected. Independent directors may be ineffective. Even though they are efficient, they may opt

to support the management because they were appointed by it. Therefore, it is evidenced that the

companies do not perform financially well when independent directors are hired [ CITATION

Moh18 \l 1033 ].

The old notion stated that good corporate practice was to have a line of independent directors for

the long-run growth of the company, however, the recent studies reveal the opposite. In reality,

independent directors are more prone to distraction as they fail to allocate ample time to the

firms. To gain more insight studies show that there are two kinds of distractions, personal and

professional distractions. Personal distractions include not just negative scenarios like significant

illness and injury, but also pleasant events like receiving important prizes. On the other end, the

professional distraction includes the challenges that the company is facing in times of crisis with

a sitting director on the board.

It is observed that there is a lack of labor division between the independent directors and board

of supervisors in the company. The gap between them often hurdles the decision-making abilities

of the directors. There is a lack of cultural acceptability of the directors in the company. Hence it

is imperative that to reap the benefits of professional theoretical knowledge and practical

experience, the independent directors should be given the proper environment to thrive.
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The independent directors are sometimes powerless due to the time constraint that they have. It is

evidenced that they feel overwhelmed by serving on many boards at once which negatively

impacts the company that they are being part of. They may not be able to find adequate

preparation time for the board meetings and other stages of involvement in the strategy-making

of the company[CITATION Ann12 \l 1033 ].

Question 3:

Sydney Airports was recently subject to a takeover bid. Explain what has happened to its

share price and why. Better answers will make some reference to how the share price

tracks in relation to what prior literature finds.

In the wake of the pandemic that struck the world, the government of Australia decided to

close off its international border to curb the spread of Covid-19. It resulted in the loss of total

passenger traffic of Sydney airport to 59% in May 2020 as in comparison to the year 2019. To

keep the airline industry afloat, governments spent billions of dollars on bailouts. Although

domestic travel has begun to rebound in certain nations, international travel is projected to take

longer to recover. [ CITATION Jon21 \l 1033 ].

A group of infrastructure investors has submitted a nearly $17 billion takeover bid for Sydney

Airport, Australia's busiest airport, indicating that investors are willing to stake a large amount of

money on post-pandemic travel. The consortium, which includes Australian pension fund

managers IFM Investors and QSuper, as well as New York-based Global Infrastructure Partners,

offered 8.25 Australian dollars a share for Sydney Airport, which is the equivalent of US$6.20.

The airport is one of the few large airports that is publicly traded on the Australian Securities

Exchange. The stock of Sydney Airport increased by more than 30% to A$7.78[ CITATION

Mik21 \l 1033 ]. However, the airport rejected the bid from the consortium of investors,
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admitting that the price seems to be very low given the long-term value of the airport

[ CITATION Don21 \l 1033 ].

The opinion published in the Australian Financial Review states that share price does not

have any importance to the consortium as there are not many great investments open for the

super funds right now. As its share price is still lower than the offer that IFM investors made a

low interest rate in Australia poses a challenge to the investors. Also, when the inflation lifts,

there will be losses for the super funds that have invested in the equities. Marred by this

challenge, the consortium may have an answer to it as an investment in unlisted infrastructure

have less volatility and can be viewed as a better investment in general [ CITATION Bro21 \l

1033 ].

In considering the rejection by the board members, their viewpoint is that it focuses

solely on maximizing long-term value for shareholders. 'The Boards recognize that in the short

term, the security price is likely to trade below the Consortium proposal's indicative price, but

Sydney Airport will only proceed with a change in control transaction on conditions that deliver

and recognize long-term value' for shareholders [ CITATION Sha21 \l 1033 ].

The offer that IFM rolled out also affected the other Auckland airport shares as it gained more

than 6 percent in value. It is in conjunction with the view that super funds tend to raise the share

prices in adjoining investing hubs as well [ CITATION RNZ21 \l 1033 ].

It is indeed safe to admit that acquisitions, on average, increase the value of a target company's

shares. The logic is simple: buyers are almost always required to pay a premium (i.e., a price

higher than the prevailing market price) to acquire a company. As a result, the listed stocks will

appreciate as soon as there is even a rumor of a deal in the works. The stock will converge on the
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proposed deal price as soon as it is known, as traders strive to maximize their profit from the

potential deal [ CITATION Lau21 \l 1033 ].

While studies imply that the target company's stock price will rise immediately after a buyout

announcement — while the acquirer's stock price will fall — this research is mostly focused on

short-term pricing. In the long run, a good management team combined with a successful

integration strategy can greatly boost the acquiring company's share price. However, even with

the strongest management teams, there is no guarantee that any deal would result in greater long-

term stock prices[ CITATION Ash19 \l 1033 ]. This is particularly important for Sydney Airport

Holdings to judge in the long run.

References

Annuar, H. A. (2012). Barriers of Independent Non Executive Directors. International Journal of

Commerce and Management, 22(4), 258-271.

doi:http://dx.doi.org/10.1108/10569211211284476

Burgos, J. (2021). Sydney Airport Receives $17 Billion Takeover Bid, Sending Shares Soaring.

Retrieved from Forbes: https://www.forbes.com/sites/jonathanburgos/2021/07/05/sydney-

airport-receives-17-billion-takeover-bid-sending-shares-soaring/
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Cherney, M. (2021). Sydney Airport Gets $17 Billion Takeover Bid. Retrieved from WSJ:

https://www.wsj.com/articles/sydney-airport-gets-17-billion-takeover-bid-11625477756

Cooper, B. (2021). Why the Sydney Airport (ASX:SYD) share price is flying higher today.

Retrieved from The Motley Fool Australia: https://www.fool.com.au/2021/07/13/why-

the-sydney-airport-asxsyd-share-price-is-flying-higher-today/

Dever, L. (2021). 4 Ways Which Mergers and Acquisitions Affect Stock Prices. Retrieved from

Dealroom.net: https://dealroom.net/blog/how-mergers-and-acquisitions-affect-stock-

prices

Donohoe, A. (2019). What Happens to Stock Prices After Acquisition? Retrieved from Budgeting

Money - The Nest: https://budgeting.thenest.com/happens-stock-prices-after-acquisition-

32684.html

Jones, D. (2021). Sydney Airport rejects consortium’s $17 billion takeover bid. Retrieved from

MarketWatch: https://www.marketwatch.com/story/sydney-airport-rejects-consortium-s-

takeover-bid-271626302547

Mohanty, P., & Mishra, S. (2018). Independent directors or toothless tigers? Retrieved from

Hindubusinessline: https://www.thehindubusinessline.com/opinion/independent-

directors-or-toothless-tigers/article8557029.ece

Narayanan, S. (2016). Emerging Challenges Affecting Independent Directors. Retrieved from

corporatecomplianceinsights: https://www.corporatecomplianceinsights.com/emerging-

challenges-affecting-independent-directors/s

RNZ. (2021). Sydney Airport takeover bid boosts Auckland Airport share prices. Retrieved from

RNZ: https://www.rnz.co.nz/news/business/446226/sydney-airport-takeover-bid-boosts-

auckland-airport-share-prices
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Watson, S. (2021). Sydney Airport share price: where next as Board rejects $22bn takeover bid?

Retrieved from IG: https://www.ig.com/en-ch/news-and-trade-ideas/sydney-airport-

share-price--where-next-as-board-rejects--22bn-ta-210715