Access: Students have to purchase a copy of the case from Harvard Business School Publishing. Please follow the link below to access the case study, which will cost $4.25.
Description: Satyam Computers, winner of the Golden Peacock Award for excellence in corporate governance, ironically became a noted failure in the history of governance in India when Ramalinga Raju, founder and chairman, admitted fraud in his resignation letter. An unrelated acquisition by Satyam Corporation created discontent among shareholders and lead to a series of investigations. The investigations revealed a fraud of about INR 50 billion ($1.5 billion). This led to resignations by several board members and the CEO. Ultimately, Tech Mahindra acquired the company. The entire episode became a mockery of corporate governance practices, raising questions about the efficacy of well accepted norms.
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This case covers the events that led to the failure of Satyam’s governance practices. The roles of various parties, such as the managers, board of directors, auditors and bankers, are discussed in detail. The case draws attention to various corporate governance and ethical issues, providing an opportunity to discuss the measures that should be taken by regulators, auditors and other bodies to prevent such frauds.
Assignment: Students must address the following questions in an essay:
- Discuss the circumstances under which Satyam’s fraud was exposed. What do you think were the reasons for the fraud? How was the fraud able to occur?
- Critically evaluate the corporate governance mechanisms adopted by Satyam. What characteristics of the board of directors may prevent financial statement fraud? What lessons about the audit committee can be learned from this case? What other governance mechanisms should be adopted to ensure compliance?
Directions: Students should address the questions above in a typed document (double spaced; 12-point font; 5 pages maximum; essay format). The case report should provide a title page, with the student’s name, section number, and date of submission. Your responses should be uploaded to the Assignment folder on iCollege by Wednesday, July 24. Strong responses will reference the material covered in Chapter 10 of our textbook, as well as the additional readings suggested on the following page.
Guidelines: Please note the following:
- All case reports are to be written (double spaced) using 12 point type with a serif font for the body (Times New Roman) and sans serif font for headings (Calibri). The report should follow correct form, spelling, grammar, etc. The body of the paper should be no more than five pages including specific recommendations supported by your analyses. Number the pages.
- The report may include an assortment of charts, tables, and exhibits in an appendix to support your analyses and recommendations. Do not add exhibits that are already included in the case. Each exhibit must be referenced and discussed in the body of the paper. The appendix does not count towards the main body limit of five pages.
- Please reference all sources used.
- The main body of your report should contain sufficient detail to explain and support the major issues identified in the case and the primary recommendations for solving these problems. Do not just rehash case facts. Present an insightful and unique analysis.
- The reports will be judged according to standards of effective business communication. They should be clear and cogent. The criteria for grading case reports include:
- Use of appropriate analytical techniques, sound logic, and well-supported arguments in evaluating the organization’s present condition and future prospects.
- Evidence of your ability to formulate realistic and workable recommendations for action. Quality contributions will reference the material in Chapter 10 of your textbook, as well as the additional readings suggested below.
- Thoroughness — both (a) scope and coverage and (b) depth of analysis.
- Use of a clear and effective writing style; i.e. strong communication skills.
Suggested Readings and Material:
- Bronner, R. (2003). “Pathologies of Decision-Making: Causes, Forms, and Handling,” Management International Review, 43, pp. 85-101.
- Camillus, J.C. (2008). “Strategy as a Wicked Problem,” Harvard Business Review, May, pp. 98-106.
- Certo, S.T., Connelly, B.L., and Tihanyi, L. (2008). “Managers and Their Not-So Rational Decisions,” Business Horizons, 51, pp. 113-119.
- De La Rama, M. (2012). “Corporate Governance and Corruption: Ethical Dilemmas of Asian Business Groups,” Journal of Business Ethics, 109: 501-519.
- Paine, Lynn, Rohit Deshpandé, Joshua D. Margolis, and Kim Eric Bettcher (2005). “Up to Code: Does Your Company’s Conduct Meet World-Class Standards?” Harvard Business Review, December, pp. 122-133.
- Soltani, Bahram (2014). “The Anatomy of Corporate Fraud: A Comparative Analysis of High Profile American and European Corporate Scandals,” Journal of Business Ethics, 120: 251-274.
- Shi, W., Connelly, B.L., and Hoskisson, R.E. (2016). “External corporate governance and financial fraud: Cognitive evaluation theory insights on agency theory prescriptions.” Strategic Management Journal, 38(6): 1268-1286.
These materials may be sourced at the GSU library and online through PAWS. Students are also free to conduct their own search for relevant readings that may address the questions posed.