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Answer this question: Imagine that you are serving as a corporate director, and your company is planning to borrow money.  The lender wants to impose a number of covenants on the borrowing arrangement.  Would you be in favor of such covenants, or opposed to them?  What are the pros and cons, for you as a director, of having covenants in place?

Do peer review of this question: Do you think that firms with strong corporate governance practices would tend to borrow more or less than firms with weak governance, holding all else equal?  Why?  What are the implications for the value of the firm?

Peer’s answer:  In my opinion, firms with strong corporate governance practices would tend to borrow less that firms with weak governance. From my point of view, strong corporate governance practices can provide firms with more reliable financial report. Which means firms with strong corporate governance can understand and control its financial operation better than firms with weak governance.

    In my opinion, the value of the firm can shows the market and investors the strength of the firm. It can also provide investors with some information to help investors choose their investment. The value of the firm is not only some financial information about the firm, but also the situation of the company's business operation.